Can NNPC Run Hospitals When It Can’t Handle Refineries?

On June 11, the Nigerian National Petroleum Company (NNPC) revealed their plans to build hospitals in 12 out of the 36 states of Nigeria. This comes after their recurrent failure to efficiently operate and maintain four refineries in the last decade. The 12 hospitals, estimated to cost N21 billion ($54 million), are among the new corporate strategy of the NNPC to expand non-oil investments and exploit the huge dent that the coronavirus pandemic has created in Nigeria’s healthcare system. The corporate strategy for investment expansion will also include housing and power.

(POPULAR READ: CHINA SET TO RIVAL DANGOTE WITH PROPOSED $20billion REFINERY)

2020 saw crude prices make a historic downfall spurred by reduced demand due to COVID-19 and price wars between Saudi Arabia and Russia. Unsurprisingly, the effects of these price cuts sent shockwaves through the economy of Nigeria, a country that relies on oil for more than 50% of its revenue and 90% of export earnings. By April, oil prices had fallen to a 21-year record low rendering President Muhammadu Buhari’s budget plans unattainable. Hence, NNPC justifies its new investment strategies as measures to cope with the boom and bust cycle in the global crude-oil market and to sustain revenue generation.

The near running aground of Nigeria’s four refineries has raised many a concern about whether or not they are capable to build and most importantly, effectively operate the proposed hospitals. In the last decade, the four refineries with a combined capacity of 445,000 barrels per day have only had their capacity utilized to an average of about 20%, placing Nigeria in the least ranks among African refineries. Even the supposed Turn Around Maintenance (TAM) that is meant to keep the refineries functional have been revealed to be shams and not properly carried out, in a couple of decades. Experts say the last properly done TAM was carried out in 1991 on the Port Harcourt refinery in 1991, after one and half years of operation by the original contractor who brought in Saipem as a sub-contractor.

In a recent Webinar on refining in Nigeria, Alexander Ogedegbe, former managing director of the Port Harcourt Refining Company revealed that no other turn around maintenance has been done since 1991, not in Warri not anywhere. The contracts are awarded and frittered away and no audit has been carried out to check those TAMs. He added that none of the refineries in Nigeria can currently run properly because of degradation due to lack of maintenance. These are refineries that can run for 50 years if they are maintained properly and the units upgraded accordingly. It is estimated that with $1 billion the Port Harcourt refinery can be brought back. To think that it cost $870 million in 1989 to build, the refinery needs to be refurbished completely to avoid such a huge investment going down the drain.

Sadly, like all government-owned parastatals in Nigeria, the NNPC’s mismanagement of the refineries is but a show of their typical inefficiency, incompetence and wastage. Despite this, the NNPC may have started the construction of a 200-bed emergency and infectious disease hospital in Kaita, Katsina State, one of the 12 planned hospitals. If they can’t keep the automated machines and refineries operational, how can they be trusted to keep Nigerians alive?