Why Transparency is vital in JV partnership for the 3 Nigerian refineries

Oil & Gas
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Friday, April 22, 2016 4.50PM / WEBtv  

As the Federal Government plans to reposition the 3 major refineries Warri, Port Harcourt and Kaduna to efficiency levels in production, through the Nigerian National Petroleum Corporation/Joint Venture partnership, energy analyst Mr Dolapo Oni has called for transparency.

In an interview with Proshare news team,Oni emphasized that the selection of the partners for the refineries must be premised on expertise and a sound track record, not just financials considering the experience of the power sector privatization.

On if the current approach by the present administration was the right step, he believed it was the best option, since President Buhari who is also the Petroleum Minister is not keen to dispose of the refineries.

Giving a comparative analysis on the workability on a joint venture partnership for state refineries, the Head Energy Research, Ecobank said countries like Cotedvoire, Senegal and Kenya have deployed the model.

According to Oni “ Cote d’Ivoire’s SIR refinery is also owned by the government and Total and is the only refinery functioning with a capacity utilization of 85% and above in West, Central and East Africa.”

He further asserted that “It works where the government gives the private investors freedom to make certain necessary changes and the refineries are able to sell into a liberalized/deregulated market”.

Speaking further the energy analyst identified the following concerns on the process of the JV partnership, to include; the level of government interference in the operations in the refinery and the continued use of price modulation.

Elaborating on the price modulation, Oni was of the strong view that the government should be proactive about it and adjust in tandem with market realities on time, to prevent scarcity.

Recently the Federal government through the Nigerian National Petroleum Corporation(NNPC) issued a tender,seeking joint venture partnership from private operators that will make the 3 refineries with a combined refining capacity of 445,000 bpd operational and increase their overall productivity.

The objective is to integrate the technical, operational and financial requirements to rehabilitate the three existing refineries in Nigeria,  with a view to meeting and/or exceeding the defined performance metrics for operations at 100 percent capacity utilization.

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