Mele Kolo Kyari, the new Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC) has promised to revive Nigeria’s four state-owned refineries, bring to an end the recurrent fuel scarcity and fuel importation as well, before the end of President Muhammadu Buhari administration in 2023. Can Mr. Kyari revive the four state-owned refineries as well as end fuel importation and the annoying fuel scarcity forever? Many Nigerians are skeptical, because many GMDs before Kyari have made similar promises, but couldn’t achieve 100 % result.
Nigeria imports most of its required refined petroleum products because the four state-owned refineries seldom meet their combined 445,000 bpd capacity due to nearly four decades of neglect, mismanagement, and periodic attacks on the oil pipelines.
Acute scarcity of petroleum products in Nigeria dates back to the early days of oil production in the country. It irritates most Nigerians and also puts any NNPC-GMD on the edge of his or her seat. It tends to be frustrating to know that many factors are responsible for the scarcity of petroleum products, however it placates that the solution is always simple- adequate supply of petroleum products to the nation’s fuel service stations, but often difficult to implement due to inefficient refining capacity, complicated logistics and sometimes political nature of the problem.
The solutions to fuel scarcity and meeting refining capacity are thorny: NNPC’s continued massive importation is unarguably expensive and unsustainable; re-introduction of the subsidy regime is corruption prone; complete liberalization or deregulation comes with high prices, public backlash and job losses, while construction of new refineries and rehabilitation of the existing ones are capital intensive and an extremely time consuming process.
The long term solution to fuel importation and the recurrent scarcity of petroleum products in Nigeria is what is critically needed. The long term is double-pronged; completely deregulate the industry and bring Nigeria’s refinery capacity to what oil refining experts call a high Nelson Complexity Index. A Nelson Complexity Index of 10 or above is indicates a refinery has high potential in value addition and high value products.
Nevertheless, with the right approach, coupled with the available cheap and easily accessible crude oil; competent manpower and funds, Nigeria’s refineries would operate at near 100 per cent utilization with minimal downtime. What is that right approach? – effective management of Nigeria’s 5,120km pipelines network, efficient management of the nation’s four refineries and building of new refineries.
The biggest problem facing the oil pipelines in Nigeria are: incessant illegal tapping by oil thieves, sabotage, right-of-way incursions, slow detection of leaks and in-line equipment failure due to inaccessible sites, including the old-fashioned method of managing the pipelines. However, there are advanced technologies that can successfully tackle these problems: SCADA- Supervisory Control and Data Acquisition, Fiber Optic Cable (FOC) and Go-devils /scrapers or Smart pigs (also known as intelligent pigs). SCADA or FOC provide advanced warning in real time which helps pipelines companies to take quick action to protect long-stretch of pipelines network, even if it is located in inaccessible areas where visual inspection might be difficult. The impressive aspect of the SCADA and FOC technologies is that they sense and locate interference before the pipelines damage takes place. Smart pigs are used for detecting anomalies in pipelines or other mechanical damages. As for right of ways incursion, experts argue that the best way to tackle it is via community involvement through sustainable CSR projects and programmes. In addition, a robust standby force is needed to effectively man the security of the pipelines.
Our refineries are not working because of poor management system. Since government will not privatize them, let the government put up effective conditions for their operations: the four refineries should be granted full autonomy to cater for themselves- pay their bills and dividends to the government. When the workers know that the refineries output will determine their take-home pay; things may change.
Since Mr. Kyari is very passionate about sustaining the reforms in the oil and gas sector as well as work within the tenets of President Buhari’s anti-corruption war – cleanup the oil and gas; sustain the current level of transparency that Nigerians have never seen. It is also very commendable that Mr. Kyari also agrees that the Dangote refinery is essential to Nigeria in meeting her plan to triple her refining capacity to 1.5 million barrels per day (bpd). Apart from reviving the four refineries, Mr. Kyari should go modular, mini and mobile refineries: There are affordable 1,000 bpd – 30,000 bpd Modular refineries whose equipment units are pre-fabricated on skid-mounted structures prior to shipment to any location. If this is done, the new GMD has found one of the keys to fulfil his promises. However, For Mr. Kyari to achieve 100% success, he has to keep up and bring-out the benefits of the painstaking reforms, utilize his in-house experiences to put the right people and policies in the right position and time. Nevertheless, Kyari has some painstaking tasks ahead in the area of touching the life of every Nigerian – which is NNPC’s Unique Selling Point.
Zayyad I. Muhammad, write from Jimeta, Adamawa state