Refineries’ Turnaround Maintenance (TAM) To Gulp $2.6bn In 2013

The proposed turnaround maintenance (TAM) of the nation’s three refineries in Warri, Port Harcourt and Kaduna may gulp $2.6 billion, LEADERSHIP WEEKEND has learnt. The TAM will begin in the first quarter (Q1) of 2013. Following the January 2012 protests caused by an increase in fuel price from N65 to N140 a litre, the federal government pledged a total overhaul of the refineries to enable them function at installed capacity and thereby reduce the current dependence on imported petroleum products.
The refineries, when operating at installed capacity, would produce between 18 million and 22 million litres of fuel daily, which is significant considering the national consumption of about 35 million litres.

It was gathered that the delay in the commencement of the TAM on the refineries, which now operates at 60 per cent installed capacity, is due to the bidding process that is yet to be completed.

In an exclusive interview with LEADERSHIP WEEKEND, acting spokesman of the Nigerian National Petroleum Corporation (NNPC) Mr. Fidel Pepple said: “The TAM will begin in the Q1 of 2013 with the Port Harcourt refinery to be followed by Warri and Kaduna refineries.

“The delay in the start is because the process has to go through a bidding process; that process has not been completed. We hope to conclude at the beginning of 2013 and hopefully begin the TAM before the end of the first quarter of 2013.”

He explained that a maintenance exercise was last carried out at the Port Harcourt refinery in 2000 and that the most recent was the Kaduna refinery which had a TAM in 2008.

However, a source in the presidency disclosed to LEADERSHIP WEEKEND that the TAM may gulp about $2.6 billion, adding that the refineries should have been sold and the money used to build modern ones.

He said: “What former President Olusegun Obasanjo did would have been best for this country: sell them (refineries) off and invest the money in building one or two modern refineries. Because even after this TAM, the management of the refineries will still not be as efficient compared to organisations being managed by the private sector, not to mention that the refineries are old and outdated.

“If we channel our resources into building one or two modern refineries, what they would be producing would be enough for the country to consume and may even leave some for export and that will permanently put an end to fuel import and subsidy issue.” 

On the 2015 deadline for the completion of the TAM of the three refineries as promised by the government, the source said it may not be feasible due to exuberances with the contract terms.

“I understand that there is a clause which states that the contract will be on turnaround and operate for some time before handing over. During the period of operation by the contractors, any incident of vandalism on the infrastructure will be repaired by them, and not the government; this may be an issue,’’ he said.

Another reason, according to the source who pleaded anonymity, that might hinder the schedule of the TAM relates to the availability of the materials for the maintenance work.  

“The materials needed for the maintenance have to be manufactured according to specification abroad and then shipped to Nigeria before being transported to site. All these processes take time and may delay the completion of the work,” he said.

“In my opinion, the time and resources spent on these old refineries should be channelled into building modern ones that will function at double capacity.’’

Source: Leadership