March 31, 2023

Global News

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The Many Lies And Contradictions Of Kachikwu

5 min read

imageLooking into the activities of Petroleum Minister-In a normal situation carrying out routine turn-around maintenance (TAM) for an oil refinery shouldn’t attract any attention locally, nationally or internationally. This is because it is regarded as a normal oil refinery industry housekeeping standard scheduled activity or exercise all over the world except here in Nigeria, where it is seen and regarded as a major national achievement. Emmanuel Ibe Kachikwu, who doubles as the minister of state for Petroleum Resources and the GMD of the NNPC last week said Nigeria is in talks with oil majors Chevron, Total and Italy’s ENI to get help revamping the ailing refineries in the country. Kachikwu has previously said NNPC was looking at partnerships or takeovers of the refineries. On Friday, September 25, 2015, Kachikwu was at his best when he disclosed to a Refinery thirsty nation that the corporation would commence the sale of refinery that fails to begin optimal operation by December 2015, when a 90-day ultimatum for their rehabilitation expires. Waxing in characteristic rhetoric Kachikwu stated thus “If by December, the refineries don’t work, I will export crude allocation and import refined petroleum products until we fix the refineries. Eight months down the line as minister Kachikwu is fast consolidating on his bourgeoning reputation as a lying machine. Months ago Kachikwu at a function said that we have moved beyond subsidy to price modulation only for the government to restart the payment of subsidy on petrol as it subsidised the commodity by N5.84 for every litre of premium motor spirit consumed in Nigeria. Another lie Kachikwu told the nation came in August 2015 when he reduced the number of directorate from 7 to 4 with the excuse that he wants to run a lean organization, he was praised for his actions from several quarters, it is shocking to know that he has quietly increased it back to 7. In February Kachikwu said that the Nigerian National Petroleum Corporation (NNPC) will in March begin a new product import system of Direct-Sale–Direct-Purchase (DSDP). The DSDP is to replace the controver­sial crude-for-products exchange arrangement popularly referred to as crude swap that has caused Nigeria to lose a whooping $966 million between 2009 and 2012 through the crude swap arrangement. We also gathered last week that Kachikwu has instead extended the controversial crude swap arrangement. Earlier, Kachikwu was forced to make a public apology amidst biting fuel shortages that have plagued the country in recent weeks, vowing to make the long lines a thing of the past, after his initial outburst of not being a magician and that the shortages would end in two months. In his apology, he reduced it to two weeks as the time frame for Nigerians to further endure the hardship.

The former Exxon-Mobil man is in the habit of mouthing often bloated and bogus projections which only exist in the fictitious world of Kachikwunomics. The minister often accused of indulging in “big talk” and unaware of ground realities by industry experts. In a bizarre move Kachikwu is seeking help from IOC’s including TOTAL Oil indicted for the worst turn around maintenance project in the history of Nigeria, conducted at the Kaduna refinery in 1998. Built at N504m, the refinery came on stream in 1980. It is Nigeria’s only inland-located refinery; located in the northern city of Kaduna, well away from the other three refineries, which are located in close proximity in the Niger Delta oil and gas producing area of the country. It is linked by pipeline to the source of its local and imported crude oils feedstock from the Escravos terminal and with the other refineries and storage depots by pipeline network system.

After suffering from years of neglect, the Kaduna refinery was closed down in late July 1997 due to an accident. However, late in August 1997, Total oil company won a three-year contract worth about $200m to repair the plant, partly upgrade some of its units, and operate it. It was agreed that, after the three-year period, if by then local fuel prices had been raised to international market levels, Total may buy equity in the refinery. The French Oil company’s activities at the Kaduna refinery was abysmal, according to expert assessment. The Obasanjo’s administration through the NNPC dismissed Total as a contractor in May 1999. Speaking to journalists on Friday, Lewis Linden a former chief Economist of one of the IOC’s said, consolidation is needed in the oil refining sector, indicating more tough decisions ahead for an industry beset by poor margins. Major oil companies have reported billions of dollars of losses from their refining business. “To put it bluntly and shortly, there will have to be some consolidation in the refining industry.” Oil refiners faced double blow in 2015 when world oil prices fell because of recession just as a host of new refining projects planned during the boom years came on stream, squeezing margins.

This magazine gathered that Shell in recent years divest 15 % of its global refining. Chevron who is also part of the IOC’s Kachikwu is discussing with to take over the refineries in recent years has also closed down some of its refineries. Investigations by shows that global refining utilization rates has been falling and oil demand in developed OECD countries has peaked, according to forecasts. Findings by Global News also revealed that International Oil Companies are seeking acquisitions in Nigeria and Asian countries because refineries in developed markets

are presently at a disadvantage compared with those in emerging markets like Nigeria, where governments often subsidies fuel prices.

The call by Kachikwu and his co travellers for full privatisation of the downstream sector of the oil industry, which includes the sale of the refineries, is being bandied in official circles as panacea for the lingering fuel crises. Industry watchers claimed that the minister’s comments and actions are uncalled for, unnecessary and a mere diversion from the failure of the ministry to address the problem of scarcity of petroleum products currently being experienced in the country.

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