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FG issues new licences for 18 refineries in Nigeria

By Daniel Alfred
THE Minister of petroleum resources , Dr Rilwanu Lukman has said that the federal government has issued licences for the construction of 18 refineries as a means of boosting employment opportunity and distribution of petroleum products in the country.

Dr Rilwanu Lukman

This, according to him is in an attempt to further intensify government’s efforts in bringing about a speedy deregulation of the petroleum industry as that has been identified as the reason behind the  the perennial problems facing the downstream sector of the oil industry.

Dr. Lukman stated this at the 2010 Aret Adams Memorial Lecture, held in Lagos during the week and noted further that apart from the huge government subsidy that benefits only a few people, and thus further entrenching inequality in the society, a regulated downstream regime cannot attract investors to the sector.

“No rational entrepreneur will build a private refinery in a country where product prices are set by the government. It is therefore important that all obstacles to the successful operation of refineries as business concerns are removed. When that is done, we can be guaranteed that the necessary investment will be made in refineries that will flood our country with  not just PMS and AGO, but also the many by-products of the refining process.” He said.

He further stated that the petroleum industry is today the mainstay of  the Nigerian economy, and it is expected to remain so for some time to come. It is one industry  that has the potential of  becoming the nucleus for the transformation of  Nigerians from a mono-cultural to a diversified, strong and resilient economy, in the league of the word’s top 20. But this cannot be achieved under the current setup as it is full of structural constraints.”

“Most of the extant petroleum laws of the country do not take into account developments in the industry in the last ten, twenty, thirty or even fifty years.

Therefore, this legislation governing fiscal terms, the petroleum profit tax Act (1959) though amended in a few instances along the way, remains an outdated legal instrument that cannot serve the requirements of contemporary industry. Even more symptomatic of this challenge is the Nigerian National Petroleum Corporatio (NNPC) Act (1977) which saddled the national oil corporation with multiplicity of none commercial roles including those of policy making and regulation. As a result, our  nation does not get the optimal benefit that other oil producing countries get from this source.”

He added that there are currently in existence a myriad of  legislative and administrative instruments governing  the petroleum industry. “Some of  them do not meet the transparency requirement of today’s extractive industries. Many have been provisions for confidentiality which encourages corruption.

The best way to fight corruption is to fight this confidentiality for all procedures. Contracts and payment, Text of all licences, leases, contracts and any changes to such documents should no longer be confidential. Similarly, all petroleum geological, geophysical, technical and well data should be accessible to all interested persons in a national data base.

And to curb possible abuse of office by senior government officials, the bill proposed that all prospecting licences and petroleum mining leases can only be granted by the Minister through a truly competitive bidding process, which is open and accessible to all qualified companies. Every Nigerians, including all stakeholders should have the right to know what is going on .

Further more, for the last four decades, in the fiscal regime, the bill represents the overhaul of governments petroleum revenue system which has four central objectives as simplifying the collection of governments revenues, creaming off  windfall profits incase of  high oil prices, collecting large profitable fields in deep offshore water and to create Nigerian employment and business opportunities by encouraging investment in small oil and gas fields. In order words, as soon as the bill is out, then we should be able to determine the deregulation kick off.” he said.


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