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Why Nigeria Should Have Open Bidding for the Refineries

A Response to Mr. Kachikwu’s “No Open Bidding for Nigerian Refineries
Dear Mr. Kachikwu,

I read the statement from Daily Trust of 26th May 2017 from Vienna Austria where you were attending the 172nd OPEC meeting currently in Session. Quoting your contradictory utterances, further confirms and reinforces my humble conviction that you should use your good offices to open up these 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 and comply with the simple ethical rules of Public Governance in a democratic setting.
Crude oil refinery concession or ‘farm out’ or privatization is not as highly technical as you are claiming in your statements.
We’ve been through the process before and I wish to refer you to BPE/NCP 2007 refinery privatization closure. First Boston Credit Sussie (now Credit Sussie), which isone of the top investment banks on the globe, was the privatization adviser to the Federal Government of Nigeria on the four refineries. PNB Paribas also gave advisory support to the Bureau of Private Enterprises (BPE)for the final closure of the privatization of Port Harcourt and Kaduna refineries, 10 years ago.
We still have these Nigerian professionals and expertise both in BPE and around the country to handle this your new ambitious ‘highly technical’ refinery concession through an open and fair bidding competition.

You contradicted yourself by the statement 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?

Your claim that the Federal Government had decided to concession all refineries by August 2017 is a welcome decision but you need to ensure that the process is through an open bid 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 because itshould give us the most qualified investor that could possibly come up.

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 proprietary 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 in giving out these refineries to the crude oil swap candidates without 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, this unnecessary debate could have been avoided because you cannot win.

Yes, “People keep mentioning Agip and OandoPlc but nobody has made the final decision on those” – This your statement 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 repairer 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 transparency? You are not a member of the technical committee as Mr. 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?

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 bid along with others for Port Harcourt refinery in 2006/2007 and lost. Today any of these companies may win if they do their homework but it must be through an open transparent 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 their 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 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 use the statement ‘Hullabaloo about the transparency has no basis’, is to say the least, condescending.

For the second time I advise you to resign now because you are dramatizing but not working for the common good of the Petroleum Industry and the Nigerian Citizens.

Dan D. Kunle

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