Within the outgone week, the Executive Council of the Federation reportedly approved the sum of $1.5bn for the turnaround maintenance of the 210,000n per day Port Harcourt Petroleum Refinery. There have been various reactions to the report but it is imperative to do a critical and evidence-led review of that decision. Every economic decision follows a natural trajectory which either improves or worsens the economic indicators of the country or region. Furthermore, every decision comes with costs and benefits. So, the pertinent question is whether this decision is right and proper in the context of Nigeria’s present economic, policy and social realities.
The first point of departure is that Nigeria has consistently postulated its desire to run a private sector-led economy. From President Olusegun Obasanjo’s National Economic Empowerment and Development Strategy to the Seven Point Agenda of the Yar’Adua presidency; then the Jonathan presidency’s Transformation Agenda, up to the Economic Recovery and Growth Plan of the Buhari presidency. On paper, none has deviated from this policy trajectory. This raises the question of the reasons informing the discrepancy between government policy and action. This is a clear case of policy somersault and shows that a good part of our economic policies is more obeyed in the breach. Recall that in the last days of the Obasanjo presidency, the Port Harcourt refinery was privatised but stakeholders including organised labour shouted to the high heavens and President Yar’Adua reversed the decision. What have we achieved with the reversal? More money gone down the drain of TAM.
The second point is that it has been reported, and not contradicted, that Nigeria has so far spent over $25billion in TAM over the years for its 445,000 total installed capacity refineries. The TAMs have never turned around the refineries because they were not programmed to turn them around in the first place. Rather, they turned around the pockets and economies of the turnaround merchants who laughed their way to the banks with little value added to the refineries. The money so far spent is enough to build replicas of these refineries. So, how can a nation that claims that it is programmed for economic growth and prosperity be spending money without results and still preparing to spend more? When a person falls into a hole and sincerely wants to come out alive, he stops digging and starts looking for a ladder, rope or any devise that will facilitate his climbing out. In our case, we are digging more and more.
How did we end up agreeing to spend $1.5billion for TAM of Port Harcourt refinery? If we still have a procurement law in this country, this is a contract that should be awarded on the basis of open competitive bidding so as to get the best value for money. When and where was the call for bidders made? How many companies submitted bids and when was the technical evaluation done? And what was the timeframe? So many questions left unanswered. If the Public Procurement Act was not followed, what was the reason that informed jettisoning the provisions of the Act? This particular procurement was done without following due process. Bizarrely, Nigeria is proposing to build a 150,000-barrel per day refinery in Katsina at a cost of $2billion yet we want to use three quarters of this amount to do TAM for a loss-making refinery. These figures are not adding up as the TAM experts are at their usual best again. This is not value for money and clearly cannot be justified in the present circumstances.
-Punch