By Obinna Agommuo- Executor Director, Economic Strategic Growth And Development Initiative of Africa (ESGADIA)
Your Excellencies, Ladies and Gentlemen of great entrepreneurial spirits, good morning and good evening wherever you may be.
Today we shall be reviewing the activities of the overseers of the main stay of the Nigerian economy; the Nigerian National Petroleum Corporation (NNPC).
Let me start by making these remarks without fear of contradiction.
1. That if the crop of managers we have in NNPC today were the crop of managers NNPC had between 1976 and 1979, we wouldn’t have been able to build and commission the three refineries; Port harcourt, Kaduna and Warri Refineries.
2. That NNPC is striving today because Crude Oil still flows in our pipelines so all they do is sell crude oil and run the organization the unconventional way they know best.
3. That the Nigerian refineries will continue to face hopeless situations under the new millennium management as they operate in utmost secrecy, deceit with lack of transparency and devoid of accountability.
4. That the inefficiency of the corporation is the resultant effect of the monumental corruption going on in that corporation.
5. Nigerian Government is not and can never be good managers of any corporation.
NNPC management have operated far below average since the 90s resulting to the incessant breakdown of our Refineries. Those that run the refineries now would claim that the foremost managers of the plants didn’t transfer the necessary technology to keep the plants functional thereafter. They will tell you they were only “thought how to switch on and switch off”. Our Storage Tanks at the Refineries have no measurement gauges. Even those manning the storages don’t seem to know the various tank capacities. Now how do you determine your output capacity when you have no measurement gauges? It’s a hopeless situation really.
Nigerian Government corporation’s machineries sometimes don’t last for more than the warranty period from their dates of installation.
It will only take a proactive management to know that subunits of the Fluid Catalytic Cracking Unit (FCCU) or Distillation or Fractionating Column for example should be replaced if discovered to be faulty, but again the bureaucratic procurement process of NNPC is out of this world. The Refineries would have to wait for approval from their boss in Abuja which may take eternity before requisition can be approved and order placed. But since the subunits have to be manufactured to specification, we end up waiting for too long for the subunits to be fixed and put back the Refineries on stream.
It’s even worse with the Petrochemical Plants which by-products, the Federal Government/NNPC don’t feel they are of economic value enough to attract their attention. This explains why the Eleme Petrochemical Plant operated for only two years 1990- 1992 and broke down. The plant remained moribund until 2006 when the then Government of President Olusegun Obasanjo sold it for $230 million to Indorama group, an Indian company as against $2.4 billion being the cost of building the Eleme Petrochemical plant. Today Indorama is ranking number 1 in the world in polymer production as they did rehabilitation and had since maintained 100% production output of what is now called Eleme Indorama Petrochemical Company.
The Polypropylene (PP) and Carbon black (CB) plant of Warri Refining and Petrochemical Company, Warri is not any better as the PP Plant had stopped working since 1999 giving room to Indorama who now reserve the monopoly of Polymer resins production in Nigeria. The Warri (PP) Plant only operated skeletally for two years or less and broke down.
The Carbon Black plant is been epileptic as well giving room to imported Carbon Black flooding our local market. Meanwhile the WRPC CB plant is the only Petrochemical plant in West Africa that produces Carbon Black.
It’s worthy of note that part of the reasons Michelin and Dunlop gave for shutting down their plant was the high cost of importing Carbon Black which accounts for over 30% of the cost of producing Tires. They wondered why Nigeria Government will own a Carbon Black plant yet they the Tire manufacturers were suffering importation of same material that ought to be produced by the CB Plant of the WRPC.
Dunlop and Michelin even sent proposal to the management of NNPC to allow them run the CB plant and still purchase from them at NNPC’s stipulated prices, an offer the NNPC vehemently rejected claiming the plant managers may lose their jobs if they NNPC accept Dunlop and Michelin’s offer.
Today, Nigeria a country with a conservative number of 11 million cars cannot boast of one Tire Manufacturing Industry. Nigeria with a conservative number of 200 plastic industries, the Government of Nigeria/NNPC cannot maintain the only Polypropylene (PP) Plant in their corporation.
Indorama Eleme Petrochemical Company till date virtually exports everything they produce leaving our local industries to suffer the same fate they suffered when the Eleme plant was moribund. It’s a shame!
That of Kaduna Refinery is more pathetic as NNPC seems to have given up on that one. The much acclaimed Republic of Niger- Kaduna Crude Oil Pipeline that was to be constructed was dead on arrival as NNPC in their usual manner did not do a proper survey to consider the capacity of the Kaduna Refinery of 110,000 barrels per day as against 25,000 barrels per day of Republic of Niger Crude Oil production capacity before embarking on the wild goose chase. The pipelines carrying crude oil from the Niger Delta are no longer safe for transporting Crude Oil from the Niger Delta region to Kaduna Refinery due to the activities of vandals. But again it is the fault of NNPC not to deploy modern day technology for Pipeline Protection using fibre optic cables with sensors, substations and with the base station located here in Abuja for proper monitoring and response as seen in other sane and responsible oil producing climes. Corruption will not allow anything to work in NNPC.
Nigeria is a joke when it comes to management of public corporations, therefore I strongly recommend that Government should privatize NNPC for effective management.
The Oil and Gas sector in Nigeria need to experience the boom it truly deserves.
More Petrochemical plants need to spring up here and there to boost the economy and reduce the over reliance on import of Petrochemicals used by our local manufacturers.
The Oil and Gas sector in Nigeria should be liberalized as the rest of Africa is waiting on Nigeria to feed them with Oil and Gas derivatives instead of importing such materials from Europe and America.
Nigeria should stop punching below her weight.