Emmanuel Kachikwu is more of a technocrat than a politician. The managing director of the Nigerian National Petroleum Corporation (NNPC) is still learning the ropes in the essential art of dazzling people with catchy production figures.
The managers of Nigeria’s ailing refineries which Kachikwu now superintend are masters of that trick. They have tricked different administrations in the country with those imaginary production figures and gleaned whatever is left in the treasury for the invincible turnaround maintenance (TAM) that are never executed.
The managers of the refineries probably learnt the trick from Mrs. Diezani Alison-Madueke, the immediate past minister of petroleum resources. In 2014, Mrs. Alison-Madueke dazzled the National Assembly with figures about the post-TAM capacity utilization of the refineries and misled thelawmakers into approving a foreign loan of $1.6 billion for the TAM.
She told the legislators that if the amount was approved for the TAM, the refineries would come out of the exercise blasting along at 70 per cent of their installed capacity. At that level of production, Nigeria would probably not need imported refined petroleum products any longer. The politicians jumped at the figure and approved a foreign loan of $1.6 billion for the exercise. One year later, the former minister left the ministry with the refineries lumbering along at 18 per cent of their installed capacity. She could not tell anyone what happened to the money she collected for the TAM.
Last week Kachikwu dropped a bombshell that exposed the transparent lies on capacity utilization flying all over the place from Nigeria’s four dilapidated refineries. The managing director of NNPC was answering questions in the senate during his ministerial confirmation appearance. His answer implied that the production figures from the refineries were actually fictitious.
He said he has cautioned President Muhammadu Buhari to be careful of the figures flaunted by the managers of the refineries, adding however that though Port Harcourt refinery might have attained 67 per cent capacity utilisation, the others remained laggards.
The ministerial nominee contended that he was still studying the refineries and that if it became clear that government could not manage them well, it would simply quit the industry.
The managers of the refineries have been bombarding government with capacity utilization figure that made it look like Nigeria would soon end its shameful dependence on imported refined petroleum products. But Kachikwu’s assertion during the confirmation hearing has exposed the managers for sticking to the same old trick that they used to mislead policy makers into approving huge sums for TAMs that turned out to be mirage.
While Kachikwu could be applauded for exposing the fictitious figures from the refineries, one cannot but blame him for what borders on indecision when it comes to policy direction on the refineries. No one knows how long it would take Kachikwu to determine that the NNPC lacks the skill and integrity to manage the refineries.
Kachikwu might be banking on the fact that the fight against corruption would knock some sense into the heads of the managers of the refineries.
However, those who studied business administration are convinced that it is extremely difficult for the managers of a failed organization to administer the reforms needed to turn the institution around.
Decades of organized mismanagement designed to drain public funds through the refineries into private pockets has reduced the plants into bottomless pits that are not only archaic but incorrigibly unproductive.
Kachikwu has no time to dither. The downstream sector of the oil industry would soon be open to the type of competition that killed Nitel.
Dangote refinery is poised to come on stream in 2017. It has the combined capacity of the country’s four refineries put together.
Besides, the Department of Petroleum Resources (DPR) has licensed 25 firms to build mostly modular refineries with installed capacities ranging from 10, 000 barrels per day (bpd).
The 25 firms newly licensed include two conventional refineries that could do more than 100, 000bpd.
In the final analysis, the scene in the downstream sector of the oil industry is changing rapidly even without the passage of the truncated Petroleum Industry Bill (PIB). The change would come at a pace that Nigeria’s four archaic refineries could not cope.
They simply would go the way of Nitel which the federal government ended up selling like scrap.
Kachikwu has been gallivanting from privatization to joint venture partnership as solution to the ailing refineries. It is time he makes up his mind about what to sell to government on how to handle the refineries.
Many Nigerians are convinced that privatization is the only sensible way out of the quagmire in the downstream sector of the oil industry. Those who think that the refinery industry is too sensitive to be controlled by the private sector should be reminded that the telecoms industry is even more sensitive than the refineries.
At the moment the federal government does not have any holding in the telecoms industry. It is only a feeble regulator easily manipulated by cruel and selfish operators.
No one would bat an eye lid if the downstream sector of the oil industry goes the way of telecoms. What is needed is efficiency.