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Government policy and fuel refining challenges

It is yet another Yuletide and petroleum products scarcity resurfaced in parts of the country during the week.  Was it really a supply gap rectified by the Nigerian National Petroleum Corporation, NNPC. It is always harrowing and horrifying the sight of fuel queues and motorists on vigil; like the eve of some festivals and holy days, spent in prayer.  The management of the corporation promptly responded; it did not degenerate to similar situations previously where community search parties were conducted by petrol consumers to find benevolent marketers that may sell the elusive commodity.

Petrol

There were precursory and genuine fears that the NNPC was to increase the pump price of products. But were they correct? NNPC clarified to Nigerians that there was no plan to increase the prices of petroleum products both from the ex-depot petrol price of N133.38 per litre and the pump price of N143 to N145 per litre. But there are speculations that a litre of PMS is still being subsidized with the NNPC absorbing it.

For about one year now the NNPC is virtually the sole importer of products. The natural instinct of buying more than one requires immediately comes in when there is threat of scarcity.

The Corporation has assured that over 25 ocean liners laden with petroleum products are berthing at the Apapa Quays. Marketers take deliveries through shuttle vessels to Tank farms in the Apapa axis with trucks waiting to lift various products in endless queues that cause traffic jams on Apapa Oshodi and Apapa Ijora highways.

Refined fuel has been a protracting and intractable problem in Nigeria. But when do we say never again to fuel scarcity in the country. Government policy must say so and President Muhammadu Buhari as Petroleum Minister should take the lead.

Oil has been used as an instrument of strategy and tact in global politics. One hopes Nigeria does not fall into this offside trap one day. Between the 17th October 1973 and November 1974, oil embargo by the Middle East bloc in OPEC led by Saudi Arabia was a geopolitical weapon against the United States accused of re-supplying the Israeli military that had two-frontal attacks by Egypt and Syria in the Yom Kippur war of 1973.

Then United States President, Richard Nixon’s response to the situation in November 1973 was a promise that America would be energy independent in ten years. Researches he ignited yielded fruits four decades after, in what is the Shale revolution that has caused global oil instability especially for OPEC.

President Donald Trump made America First Energy Policy on inauguration in January. When would it be a pledge by a Nigerian President that Nigeria would be self-sufficient in petroleum products availability? What has stalled the rehabilitation of the nation’s four refineries in Port Harcourt, Warri and Kaduna? It goes beyond the NNPC because it is a matter of policy and political will. President Buhari inherited this problem in 2015 and has again parried it.

Abandoning our refineries as a matter of policy would be a disservice to Nigeria. Is it good news that the NNPC Group Managing Director, GMD, Dr. Maikanti Baru hinted last week that works on refurbishment of the Corporation’s refineries through original builders of the plants had commenced? Who does what between policy formulators and operators stalled the planned rehabilitation in 2017.

Some persons might have advised the President that the private sector is best suited for lasting solution. Advisers confuse the Nigerian situation with that of American. America has no national oil company like Nigeria and OPEC and some non OPEC members. America’s publicly traded companies like ExxonMobil, Chevron and Conoco Phillips are protected like national oil companies. And whether state owned or publicly owned, what is needed are the deliverables.

Petrochina as a State owned integrated Oil and Gas Company is listed as part of the China National Petroleum Corporation.  Petrochina like NNPC operates in exploration and production, refining and chemicals, marketing and natural gas and pipelines.   By 2014, it surpassed Exxon as the biggest energy company by market value. Petrchina employs half a million people directly. Petrochina invest US$1.75 billion in research and development annually.

Another example of national oil company success is the Saudi Aramco. It is the biggest energy company in the world, generating a billion dollars every day. Its investment in research and development is second to none. It hopes to be number one refiner by 2025. With the right policies NNPC can be a big player in global oil and gas. Last week Baru challenged universities to assist in finding solutions to Nigeria’s refining problems.

The Petroleum Minister and his team should formulate oil policies that would encourage competition. Dangote saw the business potential in refining to start the construction of 650,000 barrels per day refinery in 2016; and to come on stream in 2018. The policy of surrendering to Dangote is defeatist. Let Dangote refinery and the State owned refineries compete to avoid a monopoly. Nigeria’s policy should be based on a population with increasing urbanization demanding conveniences that petroleum provides.

 


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