Group Politics Editor, Taiwo Adisa, presents the discoveries made during a recent tour of oil installations in Port Harcourt, Rivers State, by the Senator Magnus Abe-led Senate Committee on Petroleum (Downstream).AS part of its mandate to liberate the downstream sector of the petroleum industry from perennial travails, especially the scourge of fuel subsidy debacle, which threw the Nigerian economy into confusion early January 2012, the Senate had, last year, mandated its Committee on Petroleum (Downstream) to probe into the existing refineries in Port Harcourt, Warri and Kaduna, with a view to ascertaining the true state of things.The decision to probe the sector was largely part of the fallouts of the motion moved by Senator Bukola Saraki, which indicated that the Federal Government had overshot its budgetary provisions for subsidy payments as at July 2011. Having conducted public hearings where stakeholders made their positions known, the committee then flagged off its tours of the critical infrastructure in the industry.On Monday February 26, the Senator Magnus Abe-led committee, with other members, including Senator Hosea Agboola, Senator Ben Ayade, Senator Ibrahim Musa and Senator Olufemi Lanlehin, embarked on a tour of the oil installations in the Port Harcourt area. The installations include the old Port Harcourt Refinery, the New Port Harcourt Refinery, the loading stations of the Pipelines Products Marketing Company (PPMC) and the loading jetties in the Okrika Local Government Area of Rivers State. Revelations coming through, however, confirmed that much of the infrastructure are in a sorry state, with the sector suffering from both inherent and contrived tribulations.The tour, which was kick started with a courtesy visit to the RiversState governor, Chief Rotimi Amaechi, was one where the senators displayed a true sense of duty. Senator Abe, a former Secretary to the Government (SSG) of Rivers State, told Governor Ameachi that the downstream sector of the petroleum industry was one that could liberate the economy. According to him, if the downstream sector performed adequatel,y the way Nigerians wanted it, the economy would be the better for it.'This committee, as part of its oversight functions, has decided that effectiveness in the downstream sector is what we will concern ourselves with. Anywhere in the world where liquid is moved, it is through the pipelines. The committee is working with the NNPC and other stakeholders to try and drive down the cost of liquid (petroleum products),' he said.The committee chairman however noted that the expected changes in the state of the nation's refineries might not come soon, as a travel advisory issued by the Japanese government against the Niger Delta was stalling the repair works on the two Port Harcourt refineries.The original contractors who built the two refineries, who are Japanese, had, according to the senator, refused to come to Nigeria because of the travel advisory of the Japanese government. He sought the assistance of Amaechi, who is also the chairman of the Nigerian Governors' Forum (NGF), to seek the understanding of the Japanese envoy in Nigeria on the issue.Governor Amaechi, who stated that Port Harcourt remained the oil capital of Nigeria, also displayed a good knowledge of the issues in the oil industry. He declared that two key issues, non-passage of the Petroleum Industry Bill (PIB) and postponement of deregulation policy in the downstream sector, were critical to the survival of the nation's economy. Amaechi told the lawmakers there could not be any hiding place for them unless they passed the PIB into law.Though he said that the common excuse the legislators could give is that the law is not presently before them, he declared that since the primary assignment of lawmakers was to make laws, they could initiate a PIB in consultation with stakeholders and pass the same into law.According to Governor Amaechi, the economy of the oil-producing states had been hanging in the balance for more than five years now because of the non passage of the PIB. He said that investors in the downstream of the oil industry could not make new investments because they had been waiting on the National Assembly to pass the PIB since 2008.The governor said: 'Nigerians seem to know the problems of the oil industry but the problem is who will bell the cart. Part of the problem of the petroleum industry is that the National Assembly is yet to pass the PIB. For years, there is no investment in the oil sector because there is no law. The problem that arises is that you are not growing the oil and gas sector and no investor comes.'The National Assembly can help in saving the situation by initiating a bill and passing it into law. The oil companies are waiting for the law, the oil servicing companies are laying off their staff and the crime rate is increasing. I plead on behalf of South-South governors that National Assembly should pass the bill because it will make a whole lot of impact on our economy.'While elaborating on the need to deregulate the downstream sector to open up investment, Governor Amaechi said that there was the need to look at the deregulation issue and take the right decision, saying the more the nation prevaricated, the more the problem would increase.'If we deregulate, yes, there will be inflation of prices for a short while. But, at the end, there will be more refineries and there will be competition. We will save the money we are using to import.'At the Okrika Jetty A and B, the committee came face to face with the rot that had befallen the oil infrastructure.The whole environment of the Jetties appeared more of an unkempt graveyard. Though the Managing Director of Port Harcourt Refineries, Engineer Anthony Ogbuigbe, told the committee that Jetty A was working, and that it loaded a ship containing 32,000 tons of crude every three days, the dirty environment did not look like a place where transactions worth N1 million could be made. The MD also told the committee that the jetty loaded for import and exports and that, for the past five years, it had been forced to abandon the pipelines due to damages to the pipes as a result of constant vandalisation.Definitely, the decision to abandon the pipelines as a mean of transporting oil means that Nigerians are condemned to pay more for the end products. The committee did not lose sight of this during the question and answer session.Senator Abe asked the MD whether it was not possible that some forces were benefitting from the failure of the pipelines to convey products despite the huge investments on pipeline security. He stated that the scenario painted at the jetty would have been different if the sector was being run as business ventures.'If your kind of business is one where you count money to invest, you would have known that you can't do business like this,' Senator Abe told the Managing Director.At the PPMC loading station, the senators again confronted the corrupt tendencies that had bedevilled the oil industry for years. A peaceful protest was going on as the senators arrived the station. Members of the Independent Petroleum Marketers Association of Nigeria (IPMAN) were behind the protest, which they said was targeted at a cabal that had hijacked oil supply to states of the South-South and South-East. The lawmakers had witnessed some suffocating queues in a few petrol stations that had fuel in the city of Port Harcourt before heading for the oil installations.Comrade Jonathan Olisah, who spoke on behalf of his colleagues, said that the said cabal was known to the management of the refineries and that the marketers were not allowed to run their businesses smoothly.He said: 'We know why Nigerians in this area have been suffering fuel scarcity. A cabal in the Nigerian National Petroleum Corporation (NNPC) has hijacked fuel supply in the refineries and that is why we don't have fuel in the filling stations. Our people are suffering because of this cabal. Please help us tell them that they must end the evil deeds of this cabal.'According to the IPMAN leader, some of their members had paid for products for one year and have not had their tankers loaded. 'Many of our members are starving and suffering untold hardships, including increasing bank charges for those who obtained loans to enter the business,' the IPMAN leader said.When the committee confronted the PPMC with the claims, the Area Manager, Engineer Emmanuel Anam, said that most of the protesting IPMAN members had no filling stations. Anam said that what many of them were interested in was just to get registered so that they could have access to the products.He told the Senate committee in the boardroom of Port Harcourt Refinery Company:'Most of the marketers you see have no filling stations and those who have paid, we have programmed batches. What they are complaining about is kerosene. We tried to remove them from our list when we saw that they don't have filing stations. 144 of them don't have filling stations.'Besides, the committee also discovered a sort of preferential loading system in the station. Whereas the officials said they had an allocation formula of 30 per cent each to the NNPC stations and major marketers and 40 per cent to independent marketers, figures presented showed that the NNPC stations took between 45 to 48 per cent of fuel loaded from the station.After a tour of the various segments of the two Port Harcourt refineries, the lawmakers settled for a presentation by the Managing Director, Engineer Ogbuigbe. Going by the briefings, it became apparent that no one could say for sure when Nigeria would become self-sustaining in local refining of petroleum products. Ogbuigbe also restated what was earlier stated by Senator Abe, adding that the refusal of the original contractors to the refineries to come for repairs in accordance with the deliberate policy of government was a cog in the wheel of progress for the turn around maintenance (TAM). He however stated that the Japanese Gasoline Company had nominated one of its worldwide partners, Technomont of Italy, as the contractors for the TAM, adding that with the coming of Technomont, the TAM was expected to be completed by December 2012.He disclosed that the Port Harcourt Refinery Company (PHRC) had not undergone TAM in the last 12 years, adding that while the old refinery built in 1965 had undergone two TAMs in 1989 and 1998, the new PHRC built in 1989 had undergone TAM on three occasions in 1992, 1994 and year 2000.According to him, the old PHRC needed a major rehabilitation. Details presented by the MD of PHRC indicated that if the four Nigerian refineries are working at 60 per cent capacity, the nation will produce 15.6 million litres of petrol, 7.18 million litres of kerosene and 11.90 million litres of diesel daily. With daily consumption of the products put at 35 million for petrol, eight million for kerosene and 12 million for diesel, he contended that there would be shortfalls and there comes the contentious issue of subsidy. He however stated that if the refineries were working at 90 per cent capacity, the nation could produce 20.3 million litres of petrol, 9.24 million litres of kerosene and 15.36 million litres of diesel, adding that the nation would only need to import about 15 million litres of petrol daily to augment the supply. The Managing Director of the PHRC explained that a good TAM was expected to take only 18 months, including periods for preparation of equipment, adding that any TAM that took longer than that was wasteful. He said that the total cost of all projects related to the repairs of the Refineries was put at $463, while the TAM was expected to cost $146 million.The figures immediately brought out another dimension of the argument. Senator Ben Ayade argued that with about $26 million, Koreas could produce a refinery for Nigeria and that with $146 million, Nigeria could make do with at least three good refineries, adding that by tagging Nigeria to the apron strings of the Japanese company, the country could be creating a drainpipe for its meagre resources.He was, however, confronted with the question what to do with the existing structures. The senator said they could be cannibalized or remodelled into smaller components. Some experts, however, submitted that $26 million could only build refineries that would produce about 10,000 barrels per day and that the pipes would not be compatible with existing Nigerian pipelines.After the long presentation of the PHRC MD, senators were buzzing with questions, most of them bordering on how cost effectively the refineries were being run. One of the questions had to do with the poor arrangement of tankers whereby trailers waiting to take fuel were made to surround the refineries, thereby creating security challenges and at the same time damaging the access road. The MD, however, declared that much of the big issues were handled at the corporate headquarters of the NNPC in Abuja.But Senator Abe summed up the visit by allaying the fears of the staff and management as to whether the committee or the Senate was interested in relieving them of their duties.He said: 'The mood of the nation is to see refineries work and the Senate committee will not be an obstacle to that and we should do so in a cost effective and reasonable manner. We will work with your headquarters to see that the TAM is working at reasonable cost to the national purse.'It is also to be noted that the oil industry is key to our national wealth and prosperity. Anytime we mismanage the oil wealth, we are mismanaging the wealth of the Nigerian people.
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