Senate asks FG to stop P’Harcourt refinery concession

Senate asks FG to stop P’Harcourt refinery concession
Port Harcourt Refinery

The Senate on Tuesday asked the Federal Government to suspend all processes leading to the concession of the Port Harcourt refinery to Agip and Oando Plc.

The lawmakers specifically directed the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, to suspend the process based on a motion moved by Senator Sabo Mohammed at the plenary.

The motion was titled, ‘Non-transparent Transaction Relating to the Planned Concession of the Port Harcourt Refinery to Agip and Oando by the Ministry of Petroleum Resources’.

As a result, the President of the Senate, Bukola Saraki, who presided over the plenary, set up a seven-man ad hoc committee led by Senator Abubakar Kyari to investigate the deal and the criteria used to select Agip/Eni and Oando to operate and maintain the refinery.

The panel was also mandated to probe the cost and timeframe of the concession.

Pending the outcome of the probe, the Senate requested that the concession process should be halted.

In the motion, Mohammed said the Senate was worried by the “non-transparent transactions” of the planned concession refinery to Agip and Oando by the ministry.

He said, “The Senate is aware that the Federal Government recently entered into an agreement with Nigerian Agip Oil Company, a subsidiary of Eni, an Italian oil giant, to construct a $15bn refinery in the Niger Delta region. It is a deal that also includes investment by Agip in a power plant, with the Italian company assisting Nigeria in the repairs of the Port Harcourt refinery.”

“The Senate notes that the Minister of State for Petroleum Resources stated that the agreement was part of a broader Federal Government plan to increase capacity for local production and consumption of petroleum products, with the aim of ending fuel importation in Nigeria by 2019.

“It also notes that while the resolve by the Federal Government to increase local refining capacity is laudable and should be applauded by all Nigerians, the observance of corporate governance principles and the country’s extant laws must be followed to the letter.”

The lawmaker said the Senate was concerned that the planned concession of the refinery to Agip/Eni in partnership with Oando Plc “without recourse to due process is illegal and a clear attempt at ridiculing Nigerians, and will definitely create a big hole that will be hard to fill in the anti-corruption crusade of the present administration.”

He said, “The Senate is aware that in such transactions, the best practice is to select partners through open and competitive bids, i.e. prepare the business for sale, market the business, select the buyers and close the transaction.

“The Senate notes that any exclusive arrangement that does not follow the above procedure, hatched in the dark without the knowledge and participation of relevant stakeholders, tends to lead to sub-optimal outcomes for the seller; in this case, the Federal Government.”

Mohammed added, “It is also aware that the major stakeholders such as the Bureau of Public

Enterprises that was empowered by law to conduct such an exercise and labour unions are not aware of the deal that is supposed to be signed fficially in July this year.

“The Senate is concerned that since Agip has no technical record or history in the Port Harcourt refinery that was built by a Japanese firm, one would have expected the concerned authority to look at the Warri refinery that was built by Agip where they have technical record.”

Mohammed stated that the Senate was saddened that on assumption of office as the Group Managing Director of the Nigeria National Petroleum Corporation, Kachukwu declared that by the end of 2015, the Port Harcourt, Warri and Kaduna refineries would be working at 90 per cent capacity, thereby reducing importation and ending the subsidy controversies.

“Up till now in 2017, the refineries have yet to be fixed and cannot even produce at 50 per cent, not to mention 90 per cent,” he alleged.

The lawmaker further said the Senate was concerned that it was not yet clear if the new arrangement was a concession or an agreement to build a new refinery.

“The confusion became obvious following the disclosure on May 11, 2017, by the Chief Executive Officer of Oando Plc on the floor of the Nigeria Stock Exchange that the group had received approval of the Federal Government to repair, operate and maintain the Port Harcourt refinery with its partner, Agip,” he said.

Mohammed noted that the development would have been wonderful as it would mean an end to importation of refined products by 2020, but insisted that many questions were begging for answers.

He asked, “Is it Agip/Eni or Oando Plc that is taking over the Port Harcourt refinery? Was there the observance of the privatisation law as regards due diligence and selection from preferred bidders before ceding of the Port Harcourt refinery to Agip/Oando?”

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