Spending $1.5b on refinery misplaced, say LCCI, others

Written by on March 19, 2021

More reactions on Thursday trailed Wednesday’s approval of $1.5 billion by the Federal Executive Council’s (FEC’s) for the rehabilitation of the Port Harcourt Refinery.

Former Vice-President Atiku Abubakar said the approval was suspicious while Lagos Chamber of Commerce Industry and Industry (LCCI) described it as a misplaced priority.

A former President of the Association of National Accountants of Nigeria (ANAN), Dr. Samuel Nzekwe, called for the judicious use of the cash.

Atiku, in a statement he personally signed on Thursday, argued that a nation with an unemployment rate standing at 33 percent and inflation at 17 percent, should not waste such a huge sum on a “moribund” refinery.

He said: “The nation must be prudent with whatever revenue it is able to generate. Even if the country must borrow, it must do so with the utmost responsibility and discipline.

“To budget $1.5 billion for renovation or turn around of the Port Harcourt Refinery would appear to be unwise use of scarce funds at this critical juncture for a multiplicity of reasons.

“Our refineries have been loss-making for multiple years, and indeed, it is questionable wisdom to throw good money after bad.”

He added that he had counseled that “the best course of action would be to privatise our refineries, so they can be run more effectively and efficiently.”

He pointed out that “the cost appears prohibitive, especially as Shell Petroleum Development Company last year sold its Martinez Refinery in California, USA, which is of a similar size as the Port Harcourt refinery, for $1.2 billion.”

Atiku, who was the Peoples Democratic Party (PDP) candidate for the 2015 presidential election, said that Nigeria must bear in mind that the Shell Martinez Refinery is more profitable than the Port Harcourt Refinery.

He also doubted if there was any tendering done before the rehabilitation contract was awarded.

Atiku asked: “Given this discrepancy, one might ask if there was a public tender before this cost was announced? Was due diligence performed?”

LCCI’s Director-General, Dr. Muda Yusuf, told The Nation that the nod for the $1.5 billion to be spent on the refinery calls for a rethink because it brings to question, the quality of prioritisation of government’s expenditure.

Yusuf said: “The opportunity cost of this proposed spending is very high. Ideally, for a government with limited fiscal space, spending should be focused on projects, which the private sector cannot readily provide.

“For a refinery, getting equity funding from private sector investors should have been ideal.Government should have utilised such resources to fix our roads and railway infrastructure.”

Yusuf lamented that security agencies that have repeatedly lamented poor funding by government should have received attention by making such funds to them.

“Securing the country and ensuring that our schools are protected should be of utmost priority at this time to the government,” he said.

Nzekwe, said that judicious use of the $1.5 billion was necessary because funds previously allocated for the maintenance of the nation’s refineries had not achieved the desired result.

He urged the government to redouble efforts towards ensuring that all refineries returned to full operation with a view to reducing the price of petrol in the country.

Nzekwe, who spoke with the News Agency of Nigeria (NAN), expressed optimism that the rehabilitation, would generate jobs and reduce pressure on the nation’s foreign currency earnings.

But, the Ijaw Youths Council (IYC) Worldwide described the FEC approval as a sign that the Federal Government has woken up from its slumber.

IYC, in a statement by its President, Peter Igbifa, said though reviving and optimising the refinery was long overdue, it was better late than never.

The group also said the rehabilitation would create employment for youths in the Niger Delta and increase the country’s refining capacity.

It said: “We don’t want to hear the usual excuse that the project is being delayed for lack of funds. All bottlenecks must be removed. We listened carefully as the Minister of State for Petroleum, Chief Timipre Sylva, reeled out the timeline for the project and we are expecting the rehabilitation to follow the timeline.”

 



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