With this letter I must seek the attention of the President, His Excellency, General Muhammadu Buhari Rtd, GCON, and the Acting President, Prof Yemi Osinbajo (SAN), in order to avoid any further debate on the processes and the future of the Federal Government owned Crude Oil Refineries.
As usual, I read on the pages of newsprints of your lecture at the Fifth Triennial Delegates Conference of PENGASSAN on the 28th of June 2017, where you again took time to dwell on your STRUGGLE to give the four(three) refineries to some 3rd Party Financiers or investors either via Crude Oil Swap deals with some local Oil trading companies or by direct negotiations with some other Financiers.
Let me quote you one by one before I make my own humble observations and suggestions without PREJUDICE, to you and the Federal Government of Nigeria, and to also seek the protection of our President and Vice President/Acting President. And the quotes begins:
(i). “There have been no attempt and there is no approval to concession or to sell the refineries. What we have approved is to bring in a financing mechanism that would enable us finance, develop and upgrade the refineries as they are today. In their present epileptic performance levels, they would become obsolete over the next three,four years”.
(ii). “My drive is to see that those investment coming through the transparent process it would go through the NNPC Board and National Executive Council (NEC). Until that happens, nobody would have been said to be selected”.
(iii). “Nothing in the equation of what we are trying to do is taking away the management of the refineries from NNPC. Or taking NNPC away from the management. However, we need to bring in funds, we need to bring in best practices, we need to bring these institutions to work at the level where they are important for this country, otherwise we are losing money” he added.
(iv). He further noted, “and the whole idea of continuing to import petroleum products in this country is a shame. And I imagine that all of us feel that shame”.
(v). “We need to fight anything that prevents us from stopping fuel import. Once that happens, it is going to open a new vista of opportunities”.
(vi). “Today, I urge you as members of the union, to take the sort of solidarity that you have to sing so passionately about away from just fighting the issues of staff welfare and move into the issue of staff investment. I like to see you begin to participate in the value chains. How do you become entrepreneurs? Some of you are some of the best brains there are in this sector. How do you make it possible to participate in a way that you can transit from been active players as the ideas people because you know all the problems in the industry. Some of you have been here for 20, 30 years, like I have been.
You know the areas where the opportunities lie, you know the areas where you can create new idea. I urge you today as part of the process of this deliberation, to begin to transit from the model of protectionism around welfare and items you are entitled to, to protectionism in terms of opportunities that exist in this sector.”
End of quotes as they relate to the refineries and Petroleum product imports. Having captured all of the above quotes from your presentations to the august body, PENGASSAN last Wednesday, it is very clear to me as an ordinary citizen and many Nigerians that you are still repeating yourself all over again and trying to justify your missteps about the Crude Oil Swaps and the refineries rehabilitation. It is apparent that you have FAILED or REFUSED to heed to advice.From your statements, you publicly declared- that; “you kept hearing all over the place, especially from people who should know better.”
Yes! Many observers are well informed on this subject and their professional conclusion is that your steps are wrong, in this very particular transaction. Mr Minister of State, may I for the third time put it to you that all your efforts and struggles to validate, panel beat, re-align, window dress and paint to Nigerians of your TRANSPARENCY in respect to the Crude Oil swap of 150,000 barrels per day for “Refineries’ Repairs or Investment”, cannot stand the crucible pot test. This debate is avoidable because TRANSPARENCY does not respect semantics and BIG English words. It is simple and straight forward. Please do the NEEDFULL, which was my advise to you when I rode on Simon Kolawole’s piece on TRANSPARENCY and the supposed characteristics, in the Crude Oil swap and Refineries’ repairs or Concessions a couple of weeks ago.
I will like to maintain for the third time that you should resign to allow our President choose a more pragmatic and focused industry expert to run the sector, which holds the key to our political economic diversification aspirations. Why this Insistence:-
1. Because you misled our President and the Nigerian people in 2015, during your visit to Port Harcourt Refinery and Warri, where you publicly declared that the refineries will all work at about 90% installed capacity by December 2015. This has not happened till date – infact you declared that $10M has been used by the management of PHRC to carry out the TAM as against the OEM/Consultants estimate of about $295M. If you were the listening type, you would have revisited the report of the Consultants on behalf of the Japanese OEM of the refinery to ascertain the veracity of the Diagnosis report.
2. Because from ‘i to vi’ above, you have publicly failed to address the simple issue of opening up the Refineries for ICB, (International Competitive Bidding), either for Repairs or Concessions or Core Investors’ Sales. You have dribbled all over the places, trying to exhibit your showmanship of industry knowledge. While the basic truth is suppressed. BPE/NCP or ICRC would have provided you the honest legitimate approach of getting this refineries off the hook since they were built and operated by NNPC. Let me emphasize once more, that you cannot win this self-created debate on the refineries and Oil Swap Deal.
3. Because your new twist to bring in, a third party Financing Mechanism to the Refineries cannot stand the TRANSPARENCY test without BPE/NCP or ICRC advert, calling for such Investment opportunities, with all the requisite Terms and Conditions for such transactions. How do you intend to make the third party investor recover their money? How much will the third party be investing in each of the four refineries? At what cost and for how many years will it take the investors to recoup their investment before the refineries are reverted back to FGN. What percentage will they control in the three refineries.
I think you just want to complicate this simple transaction and process of privatization which is doable within one year.
4. Because in (‘ii’) above, you publicly declared that you want the investment coming, to go through transparency, but your actions and in actions are in the opposite when you are doing preventing the best practices of an ICB and subjecting the process to the legitimate coun il of privatisation and ICRC acts. How can you bring investments from third parties to the refineries when they have been listed in the NCP Act for privatization? You have to comply and stop hiding behind one finger. You cannot combine the Crude Oil swaps of 150,000 barrels per day with the Repairs, Concessions or Core Investors’ Sales of the refineries. There are too many questions and subjective issues that requires an umpire such as National Council on Privatisation and/or ICRC. No one will invest in a venture that is not legitimately structured as you well know. The NLNG is a success story because the IOCs own 51% and they Operate and Manage, with an Act backing the investment. The same can be said of the BONGA and AGBAMI offshore operations among many that are based on Production Sharing Contract (PSC). So how do you, Mr Minister of State want a 3rd party investor to put his money in the refineries he does not have controlling share, concession agreement for 5 to 10 years?
5. Because in ‘iii’ above, you publicly declared that you are not attempting to take away the refineries from the NNPC management nor NNPC away from the refineries. So how then will any investor have control over his investment? You told PENGASSAN to stop holding unto what they see as their own entitlements “Protectionism” but on the same podium you said NNPC will still own the refineries. How will this happen if you don’t request of PENGASSAN’s consent to allow you advertise the refineries for Sales or Concession in accordance with the Law (NCP Act)? I’m sure members of PENGASSAN and staff of the refineries can only own shares if the refineries are properly privatised. As at today, they can only fight for their salaries, gratuities and pensions because the refineries are 100% owned by FGN. This is a Social License Issue which can best be managed if you open up the refineries for sales. How many children of the refinery staff can secure a job, from the three refineries? It is by privatisation of the shares, you can allocate 5 or 10% to workers and another 5% to 10% to the Communities via their LGAs and State Governments. AS the refineries have been in the last 20 years, they have not grown nor expanded with the control of NNPC and therefore, the PENGASSAN members of staff of the refinieries, are more at disadvantage than you are trying to convey. Mr Minister of State, you may need to visit Eleme Petrochemical (INDORAMA) in Port Harcourt, to see the success story of a privatised enterprise and the dividend accruing to FGN, the state and the communities.
6. Because in (‘iv’) above, you publicly declared that Nigeria should be ashamed for the continuous fuel imports, and that we need to fight anything that prevents us from stopping fuel imports. Oh my goodness, all your actions and inactions in the last two years and even as at this moment are largely responsible for the shame we find ourselves. You failed to apply common sense when you were the MD of NNPC by not telling the President the whole truth about our refineries’. Out of sentiments and emotions you told our president, stories that are not achievable and that could not stand the test of time. That is why the realities on ground today made you to feel ashamed. The honest step for you is to apologise to Mr President and the people of Nigeria and resign. I am sure you know very well that the downstream sector of the Petroleum Industry were been deregulated gradually and that was what necessitated the PPRA act. But today, PPMC and NNPC retails are competing with the private investors who had borrowed money at very high interest rates, to set up petroleum distribution infrastructure, such as depots and tank farms. In the last two years, what have you done to ease the business environment for the downstream investors?? No wonder, all sorts of trade malpractices are in that segment of the industry. Are you honest enough to Nigerians that NNPC involvements in the downstream is not one of the major loss centres for the Corporation? Total, MRS, Mobil, ConOil, Oando and Forte Oil; were all gearing towards massive downstream investment in the last 10 years but suddenly they lost momentum and as today they have to queue at PPMC to get product allocations. Who created the shame for the country? The National Asset Protectionist Advocates.
I am aware that all the JVs and NLNG including BONGA and AGBAMI are very viable and they bring handsome dividends to the FGN. Can you say the same of the NPDC upstream activities?? So the fight must begin with you Mr. Minister of State and Chairman, BOD NNPC. As long as you want to have a protectionist outlook while pretending to be a driver for transparency and open transactions for the Crude Oil Swaps and Refineries’ Repairs, these problems and shame will remain with us. All the opportunities in the downstream are being strangulated by you and all the investors are having issues with their bankers and financiers. When last were the downstream operators paid for their PPRA import allocations?
Let us take Gas at the downstream level, who owns and operates NGC?? NNPC of course. Have they been able to give sufficient quality uninterrupted Gas Supplies to all the Power Plants in Nigeria, especially those 10 power generating plants of NIPP still owned by the FGN, States and LGAs??? The answer is obvious. So what can you say about this. SHELL and AGIP built and operate (on AGFA Basis) two power generating plants for FGN without any major problem with the gas supplies. Why?? We all know the reasons. So can you now say all your shenanigans to date have helped or aggravated our shameful situation?
7. Because in (‘V’) above, you said we need to fight to stop the fuel import armada, but you have virtually monopolized the fuel imports since you came to office in 2015. What have you done to indicate that Nigeria will not continue to import petroleum products in the next foreseeable years. The only ray of hope is from the private initiative of the ambitious business mogul, Mr. Aliko Dangote, who is struggling to execute a gigantic 650,000 barrels/day of crude oil refinery in Lagos. If you had keyed into the open transparent industry reform and downstream deregulations with good focus and strong advise to our President, by now, NNPC and the Nigeria Market will have been better structured and more rewarding for the downstream investors. It papers all NNPC imports are still being subsidized and only time will tell of how much we are losing. The masses never get the full benefits of the subsidy. So if you are able to bring a 3rd party financier to the three refineries, what guarantee do you have that their appetite is not for the Crude Oil swap of 150,000 barrels per day only? It is likely they will start to enjoy the dual advantage of access to 150,000 barrels per day for exports and free imports of the refined products at a special margin. We are yet to know about all the ingredients and terms that are guiding this Crude Oil swap transaction that was heavily criticised during the last administration of Mr. Goodluck Jonathan. Intrinsically you have by yourself alluded to the fact that they refinieries are going obsolete within the next two years.
8. Because in ‘vi’ above, you tried to whip social sentiments of PENGASSANs members who are the major STAKEHOLDERS in the Nigerian oil industry today. It appears, you want them to be passionate about their roles in the refineries and at same time, to ask for shares in a yet to be privatized enterprise. How can they become owners or part owners if you are allowed to bring third party financers or investors without open bids via an ICB with BPE/NCP and or ICRC?? Maybe the recently inaugurated National Council on Privatization (NCP) will help us to stop your dodgy transaction processes which beg for transparency in all sincerity. It is only this legal body (NCP) that can allocate and approve shares to the WORKERS and the HOST COMMUNITIES. Luckily, Mr. President is the Minister OF Petroluem and the VP/Acting President is the Chairman of NCP. The two can overturn your desperate Refinery deals, because the 1969 Petroleum Act does not provide for a Minister of state in the Petroleum Ministry. PENGASSAN knows what I’m talking about, and they laughed at all your grammar and semantics trying to woo them to follow your hand over of our aged refineries to your new found Crude Oil Swap Investors.
9. Finally, I still strongly believe that the most dignifying way out of this ethical problem you have put yourself on these refineries, is to resign and apologize to the President and Nigerians for all your misleading public declarations on our Crude Oil Refineries and fuel imports.
I am pleading with Mr. President and the VP/Acting President to kindly use their good offices to request of your voluntary exit from the cabinet. By so doing the Nigerian people will further reinforce their faith in our Rule of Law and Ethical Values as well as Public Office decorum.
I hope this debate will come to an end, Mr. Minister of State, by you doing the needful. Very Sincerely, Dan. D. Kunle dankonsult@yahoo.com
Comments