Kyari Outlined The Justifications For The Continual Payment Of Refinery Employees

……Says, “You will not see any importation into this country next year.”

The Group Chief Executive Officer of Nigerian National Petroleum Company Limited, Mallam Mele Kyari, who was a guest at the 49th session of the State House briefing organized by the Presidential Communication Team, has disclosed why the staff of those refineries was paid salaries and allowances:

The Group Chief Executive Officer of Nigerian National Petroleum Company Limited, Mallam Mele Kyari, has justified the salaries and allowances for the staff of the 4 refineries thus:

“This question has been raised severally in many forums and the National Assembly. There are two options. When you have a refinery that is not working, typically, what you do is prune them down, break them into crates, and then ask everybody to go, and they have security men to watch it. Otherwise, the second option you have is to keep them, as we’re doing. You continue to lubricate the parts that you must lubricate, and test-run some of the parts that you have to test-run, otherwise the day you want it won’t work. “

“So, it is the second option we are doing. We have to keep it. We’re not ready to take it down to pieces. Typically, when you bring them down into crates, you will never want to bring them back. But we know that we will bring them back. We know that we’re working on them. And that means that you are keeping personnel to continue to do those activities. And more than anything, the other implication is that everybody has to be sincere so that you can stop the salaries. And this is also a matter that has gone to the National Assembly, and the informed position that we have, even by the clear wisdom of the National Assembly, is that we can’t do this at this point. And that’s why we’re paying the salaries.

“But what we have also done to minimize that by moving many of the staff to locations where they will be put to work. And we’ll continue to do this as we know that, ultimately, the refineries will now be run on an O and M basis, so we’ll not need this cost as we go forward. It will continue to diminish. Some retirements are happening as a result of age and very many other considerations, and the numbers are coming down to statutory requirements.

When asked when the repairs to the refineries will be completed, Mallam Mele Kyari said, thus:

“We will restore them to 90 percent of installed capacity; that is the minimum we’ll deliver. And then, of course, on borrowing for the refinery, we’re borrowing from Afreximbank, and we’re also borrowing a billion dollars for this purpose.

“Let me first address the issue of the stoppage of the importation of petroleum products. Even if all our four refineries were in three locations, by the way, I’m sure you’re aware that in Port Harcourt two refineries are operating at 90 percent of their installed capacity. They will only be able to raise 18 million liters of premium motor spirit. That means even if all of them were working today, you would still have a net deficit of PMS imported to this country.

“This is what it means because our population has grown, demand has grown, and the middle class has grown. I’m sure everybody here owns one or two cars, and so on, such that the volume of premium motor spirit required in this country has grown almost exponentially because there is an exponential growth in our needs for petroleum motor spirit. So, even if they all return, we will continue to import petroleum products because, thankfully, NNPC owns 20% of the Dangote Refinery. And not only that—and we’re very proud of this—we’re not only owning 20 percent equity, but we also have the first right of refusal to supply crude oil to that plant. But we saw this energy transition challenge coming. We knew there would come a time when you would look for people to buy your crude and find none, which means we have locked in the ability to sell crude oil for 330,000 barrels minimum by right for the next 20 years.

“By right, we have access to 20 percent of the production from that plant. That means that whatever happens, we have the right to take 20% of the production as part of our equity. And this refinery, if it does come up—and it will come up because we are on the board of that company and we know what is happening now—will come on stream by the middle of next year. The projection is for the first quarter, but we think that it can come up by the middle of next year.

“If it does, this refinery alone, because it has a 650,000 per barrel capacity and different technology, means that it can crack the crude in a manner that means you can have more gasoline than a typical refinery. That means that the refinery can produce up to 50 million liters of PMS. So, the combination of that and our ability to bring back our refineries will eliminate any importation of petroleum products into this country next year.

“You will not see any importation into this country next year. This is very practical. This is possible. When we’re done with our refineries and the Dangote Refinery, and the small initiatives that we are doing, small modular condenser refineries that we’re building, if that happens, and we’re very optimistic that it will happen, you will see that this country will now be a net exporter. It will be a hub for the export of petroleum products not just to the West African sub-region but to the rest of the world. This will happen. The flow of supply by the middle of next year will change. So, you will not need the importation of petroleum products into this country by the middle of next year.

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