Why Nigeria Must Have Open Bidding for the Refineries, By Dan D. Kunle

Dear Mr. Kachikwu,

I just read the statement in Daily Trust newspaper of May 26, 2017 from Vienna, Austria where you were attending the 172nd OPEC meeting. Quoting your contradictory utterances further confirms and reinforces my humble conviction that you should use your good offices to open up the refineries for International Competitive Bidding (ICB). This will be in tandem with the philosophy of President Muhammadu Buhari and best global practices.

May I also remind you that your utterances do not reflect or comply with the simple ethical rules of public governance in a democratic setting. Further more, crude oil refinery concessioning or ‘farming out’ or privatisation is not as highly technical as you are claiming in your statements to us the ordinary citizens in Nigeria. This is because it was done before and I wish to refer you to the 2007 Bureau of Public Enterprises/National Council on Privatisation refinery privatisation closure. One of the world’s leading investment banks, First Boston Credit Sussie (now Credit Sussie) was the Federal Government privatisation adviser on the four refineries. PNB Paribas also gave BPE advisory support for the final closure of the Port Harcourt and Kaduna refineries. We still have these Nigerian professionals and expertise both in BPE and around the country to handle this your new ambitious and ‘highly technical’ refinery concessioning through an open and fair bidding competition.

You contradicted yourself in the statement by saying that the bidding process is open to all willing investors, but how will all the willing investors with technical and financial capabilities know across the globe if you do not advertise what you want to sell or concession, with all the criteria and ground rules for them to comply with? Do you think the whole world will be aware by watching you on TV talking about the refinery concessions in Nigeria as a ‘talk advertisement’ – from Houston, Texas to Lagos to Vienna, yet you are going to be the umpire for the bid evaluations and awards? How?

My humble advice, Mr. Kachikwu, is for you to allow BPE/NCP or ICRC to handle this transaction in the most transparent manner. Oando, for example, bidded along with others for the Port Harcourt refinery in 2006/2007 and lost. Today any of these companies may win if they do their homework but it most be through an open, transparent, and competitive bidding.

Your claim that the Federal Government has decided to concession all refineries by August 2017 is a welcome decision but you must ensure that the process is through an open bidding competition via the appropriate statutory Federal Government bodies, NCP/BPE/ICRC, to enable Nigerians have a ‘bidders beauty parade’. This is the essence of the open bid process, as it will give us the best and most beautiful investor possible. As proprietary as the case with GE/Nigeria Railway narrow gauges’ advantage was, the Federal Ministry of Transport went ahead to place an advert for other ‘would be’ investors to compete with GE. At least this will, to a certain extent, give credibility to GE propriety know-how in railway engineering when they eventually get declared as the final winner. It appears from your utterances in the last one month that you are bent on giving out these refineries to crude oil swap candidates without an open bid, which you would have achieved on behalf of the presidency to enhance the transparency obligation, with a minimum of three weeks advert in some local and international media. The invitation to bid would have closed by now. The choices are open bid or no open bid, and this unnecessary debate could have been avoided because you cannot win it.

Yes, “People keep mentioning Agip and Oando Plc but nobody has made the final decision on those”. This statement of yours being quoted in full further portrays your bias for Oando and Agip, as you have become like a ‘sales agent’ to them. Are Agip and Oando the only refinery repairers and operators in the world? Part of your statement says, “Agip and Oando are probably the front runners because they have put a lot of work on that but you are not in the technical committee”. What is the meaning of this in relation to transparency? You are not a member of the technical committee as the minister of state for Petroleum and chairman of the Board of NNPC but you are privileged to know that Agip and Oando have put a lot of work into this transaction? How does this help our transparency image?

…this whole transaction appears to be a mockery of ourselves and our processes in Nigeria because we the ordinary citizens have no power to interrogate your actions and inactions. For you to make the statement, ‘Hullabaloo about the transparency has no basis’, is to say the least.

My humble advice, Mr. Kachikwu, is for you to allow BPE/NCP or ICRC to handle this transaction in the most transparent manner. Oando, for example, bidded along with others for the Port Harcourt refinery in 2006/2007 and lost. Today any of these companies may win if they do their homework but it most be through an open, transparent, and competitive bidding. Finally in your public declaration from Vienna, you said you are the chair of the steering committee waiting for the technical committee to finish its work before your steering committee will then take it to the NNPC Board. If this process is not yet concluded, why then have you started to talk about Oando or Agip taking over Port Harcourt refineries and how then do your public utterances give confidence to other would be investors in any of the refineries??

In summary, this whole transaction appears to be a mockery of ourselves and our processes in Nigeria because we the ordinary citizens have no power to interrogate your actions and inactions. For you to make the statement, ‘Hullabaloo about the transparency has no basis’, is to say the least.

For the second time I advise you to resign now because you are dramatising but not working for the common good of the petroleum industry and the Nigerian Citizens.

Dan D. Kunle, dankonsult@yahoo.com, is a business consultant to the energy sector and a privatisation advisor.

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