Kalu Ajah: Your Assertions on Kaduna Refinery are Wrong, Says Bello Saleh

KADUNA REFINERY & IMPORTED CRUDE – Your Assertion are Misleading:

Hi @FinPlanKaluAja1 –
because your take on this, like that on Kolmani drilling, is wrong, I am here again. Sorry.

Your assertion on Kaduna Refinery as ‘designed to use imported crude’ is a mischievous, misleading half-truth. That assertion is designed to paint a picture that serves a false and divisive narrative. I hope you check yourself on this – that is if you are not doing it deliberately with the intention to cause disaffection between Nigerians.

Wrong assertion #1; ‘The Kaduna refinery was designed to use imported crude’ -.

No. The refinery in Kaduna, like the other two Nigerian refineries in PH and Warri, was designed to run on Nigerian light crude.

However, the ‘P’ in WRPC n KRPC (the acronyms of their official names) stands for the word ‘Petrochemical’ – the two refineries are both designed to be both ‘Refining’ and ‘Petrochemical’ plants. They are both designed not only to refine crude into usable fuels (PMS, AGO, Kero, cooking gas), but to also process crude oil into different types of petrochemical derivatives for civil and industrial use.

In the case of Kaduna refinery it was the wisdom of the the NNPC management and the Nigerian government that it should process and produce petroleum derivatives which the nation needs at our stage of development, but which the two other refineries in PH and Warri can not produce because such derivatives can’t be obtained from light crude, which is their only feedstock.

So a lube plant which requires heavy, parafinnic crude, which is not obtainable in Nigeria and has to be imported, was added to the Kaduna refinery’s design as a petrochemical feedstock. Kaduna Refinery refines the Nigerian light crude into fuels and the petrochemical plant processes the imported heavy crude into heavier derivatives. So that your statement is a deliberate half-truth.

As at the time of commissioning, that lube plant was the biggest in Africa and the first in West Africa – giving KRPC’s products a ready-market in Nigeria and western Africa. Which makes good economic sense. Its derivatives include lube oil for blending into lubricants, asphalt for road construction and wax for industrial use.

Why build it in Kaduna?
Demand modelling in very early 70s and and mid 70s by the then NNPC management, revealed a rise of demand for petroleum products that warranted the need to increase our refining capacity beyond the only one refinery we had at that time, the PHRC. The first model predicted increased demand in the south and justfiied a new refinery, which was sited in Warri, the WRPC.

The later model predicted same demand spike in the north, and a refinery was sited in Kaduna to satisfy the projected growing demand in the region.

Why Imported Crude?
The Warri and Kaduna refineries were commissined three years apart in 1977 & 1980 respectively and, as mentioned above, both refineries were designed ab initio as both refining and petrochemical plants; with the Kaduna refinery strategically designed to process imported heavy crude for those petrochemical derivatives we need as a nation but we cannot obtain from PHRC and WRPC because these plants are both designed to process only our local, light crude, the Bonny Light.

So were it decided by our national economic planners to process the heavy crude in Warri, it would still have made no difference as the light crude would still have to transported via pipeline to Kaduna anyway.

Siting a refinery in Kaduna was an economic and strategic national development decision. It was not stupid, ill-informed or parochial, as you are trying to paint it.

The Nigerian and NNPC leaders when the two refineries in Warri and Kaduna were conceived and built were both non-northerners; General Olusegun Obasanjo, the Head of State is from and Chief Remilekun Marinho, the NNPC GMD at the time, are/wer both from the S/West. The chairman of the NNPC board at that time was Obasanjo’s Minister of Petroleum, Muhammadu Buhari. Northerners didn’t just wake up one day built a refinery in the north to “steal southern crude oil”.

Wrong Assertion #2; ‘So Nigeria, allocated funds, built a refinery inland, then built oil pipelines, then imported crude oil to Nigeria to refine. what economic logic is this?’-:

I am surprised that as an economist the very simple economic logic behind the decision is lost on you. Let me help you –

Logic no. 1; The north was where the target demand that needs to be satisfied is (or projected to be) but the crude is produced in the south – so, either way something has to be transported. But what is easier (and cheaper) to move to the end user in the north? The various products through different PIPELINES, rail and trucks (if the plant is in the south) or a single commodity in one pipeline, the crude (if the refinery is in the north)?

Logic no. 2; There already exists two refineries in the south able to satisfy both current and projected demands in the south at the time, so why site another one in the same south to satisfy an identified demand hundreds of miles away and for which products have to be trucked by rail or trucks?

Logic no. 3; For our level of development, we need heavier derivatives that our light crude can not give us. As an economist, would you have preferred we import the heavy crude derivatives, including asphalt for our road construction, or bring in the heavy crude and add value to it by refining it locally? To me this is a no-brainer.

Logic no. 4; Site our important critical midstream energy infrastructure in one region that is by the coast or take one of them inland – and make it difficult to get to get to in case of a regional or international conflict?

Logic no. 5; How better to take advantage of petroleum products demand in the greater Sahelian region than to site a refinery in northern Nigeria?

Definitely, the 700km crude pipeline from Escravos to Kaduna is a huge investment, but it makes better logistical sense and economic value than other options open to our national planners as at the time the decision to site the refinery in the north was taken.

It was an easy, patriotic decision. I am sure they knew better than you do half a century later.

Your unguarded assertions in one or two lines completely miss the point and mis-inform your audience. But, like I said, may be you are doing it deliberately.