Sorry state of PH refinery moves committee to tears

No Comments » May 2nd, 2012 posted by // Categories: Energy Development Project



Sorry state of PH refinery moves committee to tears

Port Harcourt refinery

The miserable state of the Port Harcourt refinery recently brought to tears some members of the elite committee set up by the Federal Government to find solution to the nation’s costly dependence on imported refined products, BusinessDay has learnt.

The committee, chaired by Kalu Idika Kalu, a leading economist and former finance minister, was on an inspection visit to the $850 million Port Harcourt refinery, which was commissioned in jubilation in 1989 when visiting members could not control their emotions on listening to tales of the massive decay at the plant.

The consortium of JGC Corporation, Marubeni Corporation both of Japan and Spibatignolbs of France, built and fitted the 150,000 barrels a day refinery with four fully functional boilers and four power plants, when they signed a completion certificate with the Nigerian government 60 days after the plant was commissioned and running.

However, BusinessDay learnt that when the committee members went there last week, the boilers had all collapsed, their insulation was gone and the attendant massive corrosion on key units was evident for all to see. Of the four power plants with total installed capacity of 15mw each, only two were running. This is against the advise by the builders that at least three should be running at any particular time and that these should be running at 50 percent capacity, to avoid long down-time, given that it takes at least six hours to warm up the power plant before it can be used to generate power.

Government data suggests that the production at the refinery sometimes falls to an average of 25 percent of installed capacity.

The visiting committee members could hardly believe that this same refinery realised $124 million and $156 million from exporting refined products in 1990 and 1991 respectively.

Staff at the refinery were said to be ill-motivated, the managers have become virtually powerless, unable to order spares or make simple decisions without reverting to their political masters in Abuja and in the process, even maintenance programmes committed to by all, are routinely missed or even abandoned, according to BusinessDay investigation.

Our reporters learnt that the first turn-around maintenance (TAM) was done on time in 1991, the second in 1994, one year late, the third was in 2000 or three years late. The next TAM was planned for 2003/4 but was put off till 2007 and the one planned for July this year has been moved to October, and by last week, it had become certain that even this later date would be missed.

The Port Harcourt refinery sits only 12 kilometres away from the Eleme Petrochemical Plant (EPCL) which was built for $1.3 billion in 1993 and sold for $225 million in a ground breaking privatisation programme in 2005 when Indorama emerged the new owners, taking 75 percent equity and the rest offered to NNPC 10 percent, Rivers State Government 10 percent, local communities 2.5 percent and workers 2.5 percent.

When Indorama took over control and management of ECPL in 2005, production of polyethylene and polypropylene pellets at the plant had virtually stopped.

Production commenced again in August 2006 and in the first three months of its new life under private ownership, production volumes at EPCL were more than those recorded in 28 months when it was owned by government.

EPCL-Indorama currently produces at 270,000 metric tons per year, whereas the highest production recorded under NNPC management (2001) was a mere 58,000 metric tons per year.

In 2008, EPCL that was once dead, paid N1.9bn each to NNPC and the Rivers State Government as dividend because in the previous year, profit after tax from its near 100 percent capacity utilisation stood at an incredible N25 bn.

This splendid performance of EPCL has reignited calls for the immediate privatisation of the nation’s refineries, with advocates suggesting that under private ownership and management, the refineries in Port Harcourt, Kaduna and Warri should meet more than 80 percent of the nation’s domestic consumption, virtually eliminating the corruption- riddled import regime that will cost Nigeria about N1trn in subsidies this year alone.


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