The Federal Government has announced its plan to boost local refining capacity as part of its palliative measures to cushion the short term effects of sudden fuel subsidy removal in April 2012 on the Nigerian masses. The minister for Petroleum Resources, Mrs Diezani Alison-Madueke, disclosed this in Lagos at the recently concluded Town Hall Meeting organised by the Newspaper Proprie-tors’ Association of Nigeria (NPAN).

She disclosed that under the 24-month programme, the contractors would bring back Port Harcourt refinery to 90 per cent capacity utilisation in the next 12 months, followed by Kaduna and Warri refineries.

Alison-Madueke said the decision to bring back the original contractors was because the Turn Around Maintenance (TAM) had been consistently abused over the years, adding that it was also a demonstration of the seriousness of the present administration.

In her words, “Our refineries when we came into government 16 months ago were running at about 30 per cent or more capacity utilisation. We have worked very hard and aggressively to ensure that at this point, they are between 50 per cent and over 60 per cent capacity utilisation, producing almost 30 per cent of our locally needed refined products at this time.

“We have gone beyond that to ensure that we bring in the original contractors, who built our traditional refineries – Kaduna, Warri and Port Harcourt to come in and this time, handle the Turn Around Main-tenance themselves, simply to show the Nigerian public that we are serious, and this is the only way we can do it,” she said.

She opined that no private investor would be willing to put down the sort of huge money required for building a refinery, unless they were assured of viable commercial return on investment. She noted that it was not in the interest of the country for the government to remain in the business of refining or such other businesses, but to hold equity participation in the interest of the economy, while the entities are managed by the private sector understanding and expertise.

“What are the challenges? If you come into the business of refineries today, you will make a slight profit, but not enough return on investment because of our population. A refinery is only viable if you are processing at least 100,000 barrels per day (bpd) of crude oil. A 100,000bpd refinery will cost you $3.3 billion to set up and that is no mean amount. A 200,000bpd refinery is about $4.2 billion. Therefore, very few people are willing to come in and invest and put down that sort of money upfront, since they are not assured of a commercial viable return on investment. So, we really have to get real about it,” she said.

She assured participants that if the country deregulates, there would be a much higher inflow of investment. She said the present administration had worked very hard over the last 16 months to ensure that for the first time in a long time, the country had been consistently wet with fuel everywhere.

“Today, you see fuel everywhere, which was not happening in the past. But we cannot control the prices, simply because the N65 that is quoted is generally available in urban centres, such as Lagos, Port Harcourt and Abuja. If you go into the hinterland in Bayelsa, you will not get petrol at N65 and that is because of the bridging cost – the cost of the logistics of taking it into those places. Why are we doing bridging and trucking – taking our products by road and by water, because our pipelines have been vandalised consistently over the years,” she added.