@debosky,

Please this is not a question of blaming the govt. or buck passing. Read up all the news reports on the TAM contracts, and how they were awarded. When Emeka Ofor of Chrome was paid millions to do a TAM that never saw the light of day. . . .pray tell, who took the decision to award him the contract? When oil blocks were awarded by previous governments. . . .pray tell, who influenced the bidding processes and who decided who got what?

Debosky, please talk to those who know about the daily activities of the NNPC. You will see that the same scenario described above, repeats itself in all govt. parastatals across the country.

http://odili.net/news/source/2007/mar/10/559.html

http://www.nigeriavillagesquare.com/index.php/content/view/6399/55

Gary K. Busch:




It took another eight to nine years before the Warri and Kaduna Refineries were commissioned (within a year of each other) with capacities of 125,000 bpd and 110,000 bpd respectively, coinciding with the 1979/80 upstream production peak. Production was again on the upsurge when the most modern of the three refineries was commissioned in Port Harcourt in 1989 with a capacity of I50, 000 bpd. The timing of these investments was very significant as they coincided with major increases in crude oil revenue accruing to the Federation. It was the Government's intention to plough back revenue surpluses in order to further add value, cater for domestic needs and conserve foreign exchange.

Port Harcourt Refinery: The last but one Turn Around Maintenance (TAM) carried out in 1994 was followed six long years later by another in 2000. The power unit remains its main problem. The premier unit was neglected until 1993/94 when it was rehabilitated, but ever since then, it has had to remain shut in favour of the main one because of power limitations, or because of crude allocation, which historically have sometimes proved inadequate.

Warri Refinery: Another example of inadequate maintenance led to catastrophic system failures such as the main Crude Heater blow up of 2000. The last full TAM was 1994. There has not been one since. Capacity utilization was a mere 37.4% in 1995 down from 72% in 1992. It has declined since then.

Kaduna Refinery: Inadequate maintenance, combined with internal staff relations (as in Warn) and a lack of resources for maintenance were a major factor in the poor refinery performance. Problems with the FCC (‘cracker’), water intake and cooler units are a regular occurrence. The 1992 TAM ran over budget and was never satisfactorily concluded, while the one started in 1998 has still to be concluded; there were two TAMs in between which were funded but never started

Capacity utilization has dropped from 73.9% in 1988 to a mere 42.4% in 1995, with debilitating results on the economy and people's daily lives, especially in the northern part of the country where Kaduna is the only hub. These have declined further, year-by-year. The estimated remedial costs are monumental, especially for Warri Refinery (nearly N28 billion) and Kaduna (N2 billion). There is no way the government was willing to pump in these huge sums of money, and has sought any number of shortcuts to relieve itself of the responsibility.

Nigeria has already issued several licenses for the repair and maintenance of the refineries. A lot of money has been paid, but very little maintenance completed.

New refinery tenders were issued. The local Nigerian companies who won the tenders for this have not been able to attract overseas firms willing to co-operate with them, nor have they been able to raise the capital needed to perform these tasks.

laudate you miss my point

I have heard all these goings on in and around NNPC, but what I do not accept is your assertion that it is simply the govt and 'powers that be' that are solely responsible for the problems. NNPC itself is full of corrupt and incompetent people, who are as much a part of the rot and corrupt contracts as the government officials themselves. The only viable solutions therefore are:

A. Get rid of the bad eggs in the NNPC ( been tried time and time again no success)

B. Privatise the refineries

we have been waiting for this 'free hand' to run the refineries for donkey years, it is completely unacceptable to me for that to continue

what makes the NNPC so confident that it can do the job this time around? given this same scenario repeating itself in all government parastatals that you so aptly described?

that is a question you keep avoiding.

debosky:

laudate you miss my point

I have heard all these goings on in and around NNPC, but what I do not accept is your assertion that it is simply the govt and 'powers that be' that are solely responsible for the problems. NNPC itself is full of corrupt and incompetent people, who are as much a part of the rot and corrupt contracts as the government officials themselves. The only viable solutions therefore are:

A. Get rid of the bad eggs in the NNPC ( been tried time and time again no success)

B. Privatise the refineries

we have been waiting for this 'free hand' to run the refineries for donkey years, it is completely unacceptable to me for that to continue

what makes the NNPC so confident that it can do the job this time around? given this same scenario repeating itself in all government parastatals that you so aptly described?

that is a question you keep avoiding.

Am not avoiding any question. I have tried to provide as much answers as I can, to the best of my ability. You started this whole discourse, by holding up Dangote & Otedola a.k.a Blue Star as the only solution to the problems of the refineries, while blaming NNPC's staff for ineptitude & demonizing them as being solely responsible for the mess that the refineries are in, today. That was where I begged to differ. NNPC has a master, to whose tune it dances (i.e. the F.G). I also asked why other parts of the world had govt-owned businesses that were alright. You spoke as if Dangote & co. were doing Nigerians a favour, by even buying the refinery and went on as if all those who opposed them were daft, for doing so. Again this is where I disagree with you. If the refineries were over-valued, why did they put down such a huge amount for it? Why didn't they build their own?

Kindly go through my previous posts on this issue. I have not said that the refineries should not be sold, but am advocating that they should be sold to those with the 'technical skill, capability and funding' to run them. Dangote possesses the funding. . . .but does he have the technical skill & capability? Oil, is not like sugar. It is an international commodity whose prices are regulated by powerful interests, in other parts of the world. Go through the Platt, and see what the various oil prices are, on a daily basis.

The same Nigerian staff, that we are so quick to criticise, go to other multi-national companies and do so well at their jobs. What is the proportion of Nigerians carrying out various jobs, in Shell, ExxonMobil & Chevron within Nigeria?

Edmond Daukoru had an illustrious career at Shell Nigeria for many years, before he was made M.D of N.N.P.C. What happened during his tenure? Was he a corrupt N.N.P.C staff, too? Most of the technical staff (especially the engineers) within N.N.P.C started their careers in other foreign multi-nationals within the oil sector, where they were adjudged as competent. Some even went on to OPEC in Vienna to serve for a while, before returning back to nigeria to join the N.N.P.C. Were they all incompetent, when they were in those places before they got to the N.N.P.C? Please get hold of the Abisoye panel report. After reading it, you would find that the greatest havoc done to that parastatal, came from govt. itself.

Listen, sometimes in selling off national assets, certain strategic interests should be considered. We should be careful not to build a powerful cabal that can hold us by the jugular using our oil industry, as a springboard. Would that be in the best interest of the nation?

@laudate

you don't understand my worry about the NNPC, NLC, some Senators and some Nigerians that are revaluing the Refineries upwards and claiming that the Refineries can easily be put back on track.

If this is the case, then why can't they invite corporations that will buy these facilities at the billions of dollars.

If they can't bring in those organizations, then, they should coop shares together via their Unions and buy these facilities over so they can manage it themselves.

If they can't, then let them just shut the hell up!

Ok Laudate, I hear you, the reason i was 'demonizing' the NNPC was their recent volte face - all of a sudden they realised that they could run the refineries, after years of failure (due to the FG according to you). my question was - why should we go down a road so often travelled with the same negative outcome?

why not give Dangote and Co a chance? Note I did not say they are the only hope, but after the competitive bidding process in which the so called foreign experts (who are the only ones who have experience successfully running refineries, Nigerians don't) were invited and they REFUSED to put their money in due to risks they perceive and other fears, Dangote won it - why not give them a try to run the industry?

OK, Oil is not sugar, but Dangote has successfully built cement plants also from scratch, isn't that also an international commodity? He has shown the ability to turn around failing industries and make them profitable - those are the credentials he brings to the table and they are undeniable. We asked the foreigners to come in, they said no, or said at a very ridiculous price, why frustrate those willing to take up the challenge?

I am not criticizing Nigerian staff as a whole, I am saying this tactic of the NLC/ other unions in the oil industry to delay privatisation and other programs smacks of a ploy to look after themselves and their cushy jobs, not any altruistic national interest. many of them especially in the refineries are collecting salaries and pensions without any productivity, while conveniently blaming the govt.

I don't really know what happened during Daukoru's reign, but that is besides the point: I don't care much for the NNPC as a whole, especially given its failure year in year out, but for them to have the effrontery to claim they can do something they have failed to do for years (due to the FG's fault according to you) is unacceptable, it is a cycle that has continued to repeat itself and should not be allowed to go on

Your last point makes sense, but note the Fed Govt still owned 49% of the shares, and could still have a say in the proper running of the companies. eventually shares would be sold out to the Nigerian public (If we believe what Dangote says) as has been done with sugar, and we would all become part owners, making them truly collective national assets.

Furthermore, I would prefer the owners of the assets to be local - people we can talk to and know where they live, people who have shown their faith and belief in the economy by putting their money where their mouth is in viable employment generating ventures, than sell off to some foreigners who have no real stake in the interest of Nigeria.

If the argument is that the "power that be" are to be blamed mostly for the rot and not the NNPC,
what has changed? Don't we still have a "power that be" in the form of a government? Someone
keep referring to Emeka Offor, but Abacha died how many years ago? In the present dispensation
called Nigeria, as long as the government retains a majority stake in those refineries, they would
not work! The only way to put the "power that be" out of business, is to privatize the refineries.

Those refineries should be gotten rid off. I wonder why we keep delaying the inevitable. NNPC/Government has failed in respects to the refineries and they will fail again. Nigerians need to understand that hard decisions need to be made for our country to modernize. In the short run, privatizing the refineries might be painful but in the long run it will benefit all if fuel is available and if there is competition in the downstream sector.

Those refineries are not worth what some people want to believe and the more the Govt holds on to them the more the Nigerian populace will suffer. Just think about all the productive man hours spent and as a matter of economics lost/wasted on queues just to buy fuel. Its absolute ridiculous. SELL OFF THE DAMN REFINERIES.

I have read virtually all the comments made on this issue and would like to contribute mine as an oil industry insider.
I strongly believe that the NNPC does not have the resources (Technical/financial) to manage the refineries. The organised labour unions made the same pitch when Eleme petrochemicals was privatised, I wish you guys could go there and see how it is efficiently been run.
The pull out of Blue star consortium is a big loss to the nation as the refineries would have been better managed.

@watchung

privatization of the refineries would be painful if in its current government ownership, it is a joy to Nigerians.

Left to me, I believe that those refineries should be given away to any Nigerian company that can run it efficiently. It is just in trying to avoid bias that a price quotation should then be in place.

You can imagine a Nigerian Senator complaining that the Crude Oil currently in stock at the Port Harcourt Refinery is worth more than $800 million. Did any of the bidding companies ask them for crude oil? Why can't the NNPC siphon off their $800 million crude oil, sell it off and return the money to the Federation account?

What is this rubbish all about. I am happy that BlueStar pulled out. They came in to rescue the refineries and make them profitable companies, but Nigerians just do not want to see another Nigerian profit even if he's serving you well.

When the Chinese came to bid $102 million for Kaduna Refinery, no Nigerian complained. When BlueStar bid $160 million for same refinery, nobody hailed them just because they are Nigerians we must believe they are robbing us.

Shebi they are pulling out now? Let Kupolokun and his Zombies go and run down the remaining life in those refineries and vandalize them further so that when the Chinese come back to Kaduna Refinery, they will be pricing it for $30 million!

Nepa, Nitel, Ajaokuta, Nigeria Airways,  Same difference!  How can we now expect them to run the refineries efficiently! 
Now, who is to blame?  Govt? NNPC? Staff? Management? Corrupt politicians? Corrupt Businessmen? Or all of the above? Actually I think this is irrelevant. 

Bottomline - Govt. enterprises(Nigeria in particular) are not geared for efficiency and are inherently corrupt.  Why are we always trying to re-invent the wheel?  We have precedence in the western world, govt. and business don't mix.  The desks and chairs will always get paid irrespective of the financial state of the corporation(the govt. will always bail them out).  So what is the motivation for the staff? Why do they have to sit-up? No revenue targets, no profit targets, no accountability. so why should they care?  They will get paid anyway.

The refineries are no different from any of the other failed parastatals.  As at the close of bidding Bluestar were the only solution to the refineries, no other takers.  The only competence, technical know-how a business man needs to have is a proven track record of managing and sustaining a successful and profitable business.  Dangote and Co have this.  Whatever else they lack they can buy-in and them delegate.  If you and I had the required resources we can go out and buy a refinery, put in our expert management team then sit back and monitor. 
I also do not see how a refinery can be a strategic asset.  The govt. can always issue licences to build new refineries to counter any monopolistic tendency from those operating the current refineries if in private hands.

There is too much money at stake here.  According to Dangote we spend $9b a year importing fuel, at a conservative 20% profit margin we are looking at close to $2b($1.8 to be exact) that will not be going to the pockets of the current beneficiaries, without forgeting the corrupt regime and sharp practices within the NNPC itself.  So in total we could be talking close to $3b.  They won't give this up without a small scale war.  Yes, they seem to be working at some point, but even them they were still not at their optimum. 

Optimum capacity utilisation is what  we need to get out of these refineries, and that can only happen with private ownership.

Honestly I don't know when Nigerians will wise up. Which generation will have the common sense to know that government and business usually don't mix well especially in 3rd world countries like Nigeria. Looks like we don't ever learn in this country. Consolidation of banks - complain, sell aluminum smelter co that hasn't produced any thing - complain, sell inept/incompentent/grossly inefficient NITEL - big complain. This is really crazy, especially when we see how privately run companies are thriving, providing services they are supposed to provide and at the same time making a profit.

Government has no business in running enterprises and it has been proven time and time again all over the world except in very few cases. Me I'm all for putting on the choping block all these so called govt run enterprises, every single one of them should be disposed off and stop wasting limited resources on them.

@MILITIA

Na which woman born you fool.Were you rasied by a single parents MILITIA or what? Can`t you for once be reasonable? U are big disgrace to REAL women.

watchung:

Honestly I don't know when Nigerians will wise up. Which generation will have the common sense to know that government and business usually don't mix well especially in 3rd world countries like Nigeria. Looks like we don't ever learn in this country. Consolidation of banks - complain, sell aluminum smelter co that hasn't produced any thing - complain, sell inept/incompentent/grossly inefficient NITEL - big complain. This is really crazy, especially when we see how privately run companies are thriving, providing services they are supposed to provide and at the same time making a profit.

Government has no business in running enterprises and it has been proven time and time again all over the world except in very few cases. Me I'm all for putting on the choping block all these so called govt run enterprises, every single one of them should be disposed off and stop wasting limited resources on them.

Complaints are to be expected. Some of these people get paid for doing absolutely nothing. They wouldn't want that to change. But change it will despite their complaints.

swing4real:

@MILITIA

Na which woman born you fool.Were you rasied by a single parents MILITIA or what? Can`t you for once be reasonable? You are big disgrace to REAL women.

Thank you sir!!!! Anything to contribute to the topic besides Mama Mille? I beg no call my name oh!  The last time I posted anything here was 2 pages ago!!!---------------DELEBERATELY TOO!!! And as far as I am concerned this is a very dry thread.  Please do not call me back here again oh!!!!  I dash you the topic--it is of no interest to me whatsoever---DO DECLARE YOUR LOVE SOMEWHERE ELSE  PLEASE!!!!!

@MILITIA
You know what i consider u to be?

swing4real:

@MILITIA
You know what i consider u to be?

This is MILITIA BUSH-CLINTON(MBC)---please leave me alone!!! I know you are Nigerian trying to "419" me!!!  Sorry!!!  You fail!!!!  Go catch another Mugu!!!!  This is your last warning--------Where is Seun?  Please we have a mugu here who is trying to contaminate this already dry thread by mentioning my name here, to start some trouble!!!!  Please he is disobeying the rules by bringing in OFFTOPICS like himself here.  I trust you will look in to this matter by freezing his reply button for about 48 hrs like you did mine!!!  Thank you for you ever loving co-operation!!!!

Signed_{--------------MILITIA BUSH-CLINTON(MBC)---Nairaland!!!!}

SALE OF NPHRC AND KPRC

"The Bluestar Consortium comprising foremost industrialists and entrepreneurs in the country pulled resources together to bid for the refineries in a transparent bid process. In full view of the public and television cameras, Bluestar Consortium was declared the preferred bidder. Our decision to age was driven by a sense of Nationalism and Patriotic instinct to save our downstream oil sector before it is completely destroyed.


*The consortium's bids of $561 million for 51% of NPHRC and $160 million for 51% of the KPRC were adjudged to have met and even in the case of the NPHRC, exceeded the reserved prices of the refineries. The bid process was televised live on the NTA and was considered fair and transparent by all.

*Bluestar's interest in the refineries was premised on the fact that private sector participation would assure efficiency and effectiveness therefore performing better than the current public sector led management. However, the current campaign led by the organized labour and NNPC that it can run the refineries more efficiently contrary to the published data that shows an average of 35% capacity utilization over the period 1997-2005 suggests that governments decision to involve the private sector in the ownership and management of the refineries was ill-advised.

*Our intention was to rehabilitate the refineries, run them to world standards and sell the shares to the public to make Nigerians proud owners of the assets. We feel from the criticism and outright misinformation of our intention, that our consortium is not appreciated. We feel very discourage by the outcry against the sale.

*Given the events since the privatization and the continued villification of the consortium by NNPC, the Consortium hereby conditionally vacates its interest in the refineries for 12 months effective 18th of July 2007 to enable NNPC deliver its commitment on the following:

-Operate the0refineries at full capacity with minimum 90% capacity utilization without government funding.
-Eliminate importation of petroleum products.


*To us at Bluestar Consortium, it is our dream to see the refineries function efficiently and petroleum products made available at affordable prices. It is this desire that motivated our consortium in the first place. We therefore withdraw our interest in the refineries for NNPC to deliver on the above commitment."


Summary of the Dangote withdrawal statement.

uhm

You can't help the people of this country. Anybody buying 51% an old, low capacity refinery like the KPRC for $160 million must first realise that they are putting the total cost at more than $310 million.

Then they have to ask themselves questions.
can I build a brand new refinery of about that capacity for about that price of $310 million? If yes, then dump that stupid deal and let Nigerians die abeg.

i don't support dangote and co buying the refineries becuse i'm short sighted or emotional,,,these men are business men and are in this refinerry deal principally to make money not to help nigerians,the reason why the refineries don't work optimally despite heavy investment is a matter for the EFCC ,the truth is the purchasing power of the avaerage nigerian is at an alltime low and as such the average nigerian cannot afford to reward dangote and co for optimally running our refineries.The shaddy manner which characterised the whole deal does not suggest that this was done with the interest of the average nigerian. whatever side of the fence you're on you'll undoubtedly feel the economic crunch as the forces of demand and supply tearaway at your hard earned resources, more importantly we need accountabilty from our leaders ,if we had this the refineries would work and we'd never have to think of sell them to one of africa's richest men,who might run it better .

Did you say purchasing power is at an all time low?! This most be some kind of reverse economics.

From a per capita income between $300-$600 in the 1990s to $1500 this decade. All the jobs that have been created and are still being created in the private sector? Purchasing power is at an all time low? Haba my friend?

No entrepreneur goes into business solely for the love of the people. But there is no how, and no matter how shrewd a business man you are, you product or services will benefit the masses for them to go out and purchase it. As was said in Proverbs:
"It is bad, it bad says the buyer, but when we walks away, he shows his pride at the bargain he made."

If Bluestar should buy the refineries, it does not mean they will BAN importation of petroleum products. It just simply gives the people the option of whom to buy from. If Dangote does not do well, and does not provide services better than the importers, his business will fold up and he will lose about a billion dollars.