Investment banker Atedo Peterside opposes spending $1.5bn rehabilitating Port Harcourt refinery

STANBIC IBTC Bank founder Atedo Peterside has urged the federal government to reconsider it plans to rehabilitate the Port Harcourt refinery pointing out that it should hold a national debate before spending a whopping $1.5bn on the project.

Nigeria has three federal government refineries in Warri, Kaduna and Port Harcourt but none of them are currently working, making the country dependent on petrol imports. To address the crisis, private sector operators are now building refineries across Nigeria, with the Dangote facility in Lagos due to come on stream over the next month, being the jewel in the crown.

Due to be a  650,000 barrels per day integrated refinery and petrochemical project, the Dangote refinery in the Lekki suburb of Lagos costs $12bn to construct and will meet all of Nigeria's domestic petroleum needs. When fully functional, the Dangote refinery is expected to produce 10.4m tonnes of gasoline, 4.6m tonnes of diesel, 4m tonnes of jet fuel, 690,000 tonnes of polypropylene, 240,000 tonnes of propane, 32,000 tonnes of sulphur, and 500,000 tonnes of carbon black feed a year.

With Nigeria's total petroleum product consumption estimated to be about 14m tonnes a year, the Dangote refinery is capable of satisfying domestic demand and producing an excess for export. Despite this, the federal government plans to resuscitate the Port Harcourt refinery at a whopping cost of $1.5bn, which has prompted industry watchers like Mr Peterside to call for caution.

This morning, Mr Peterside, the co-chair of the Nigerian government’s Vision 2050 committee, called on the government to halt the plan. Last Wednesday, Nigeria's Federal Executive Council approved the money for the rehabilitation of the Port Harcourt refinery at a virtual meeting presided over President Muhammadu Buhari.

This approval has expectedly been greeted with mixed feelings as the country has in the past spent billions of dollars on refinery maintenance. Despite such expenditure, however, the refineries have not worked with many experts calling for their privatisation.

Mr Peterside, who was on the National Council on Privatisation between 2010 and 2015, said: "The federal government should halt the $1.5bn approval for the repair of Port Harcourt refinery and subject this brazen and expensive adventure to an informed national debate. Many experts prefer that this refinery is sold as is by the Bureau of Public Enterprise to core-investors with proven capacity to repair it with their own funds."

Former vice president, Atiku Abubakar, had described the decision as suspicious, adding that he wondered if there was a public tender before the cost was announced, or if any due diligence was performed. He added: “We cannot as a nation expect to make economic progress if we continue to fund inefficiency and we are going too deep into the debt trap for unnecessarily overpriced projects.

“Our national debt has grown from ₦12trn ($31.33bn) in 2015 to ₦32.9trn today. Surely that is shocking enough to cause us to be more prudent in the way we commit future generations into the bondage of bonds and debt.”