By Sonny Atumah
Many Nigerians may not know that there are refineries in Nigeria. Our four refineries have been comatose in a quarter of a century. Those who know that four refineries exist in Nigeria, wonder day and night why their national infrastructures in Port Harcourt (1&2), Warri and Kaduna would operate at zero level.
Where did we go wrong? General Sani Abacha spent five years as Head of State exporting crude oil and importing fuel, sometimes smelling fuel. General Abdulsalami Abubakar ended the military adventure and heralded the fourth Republic in 10 months exporting crude and importing fuel. Since 1999 it has become a relay race for fuel importation of unequal distance covered in the event and amounts spent in fuel subsidy payments. President Olusegun Obasanjo in the democratic dispensation spent eight years exporting crude and importing fuel. He passed on the baton to President Umaru Musa Yar A’dua who had a health battle for over three years and died. President Goodluck Jonathan took over and imported fuel for over five years. President Muhammadu Buhari on a political reincarnation is in his fourth year, seeking reelection, exporting crude and importing fuel. He anchors the last leg of the relay quartet.
It is no longer news that Buhari who built the refineries in Warri and Kaduna in about three years could not rehabilitate them in four years. President Buhari jocularly alluded to the fact that Nigerians who call him ‘Baba-Go-Slow’ should blame the system that slowed him down as he received FCT residents led by the Minister, Muhammad Bello on a Christmas visit to the Aso Rock Presidential Villa. He also told the national executive members of NUPENG a fortnight ago that although reforming the petroleum industry will unlock numerous untapped potentials for the nation, reforms must be well thought out in the interest of Nigeria. To him such reforms must not be rushed as we are still suffering from effects of many legacy policies that were rushed without appreciating the consequences. The President may be right as the May 11, 2016 removal of fuel subsidy might not have been well thought out. One understands the President’s level of commitment and patriotism to take Nigeria to the next level but tide and time wait for no man.
Nigeria has wasted several billions of dollars importing fuel and paying subsidies on imported fuel. Rehabilitating our refineries would free funds paid to import these fuels: premium motor spirit, PMS or petrol; automotive gas oil, AGO or diesel; dual purpose kerosene, DPK made up of household kerosene and aviation turbine kerosene or aviation fuel, to tackle the problem of infrastructural deficits in Nigeria. Rehabilitation of refineries has been a sing along for some of us who are concerned in the petroleum industry. Petroleum is the most important commodity nature has provided mankind with as many as 6000 byproducts and derivatives when a barrel of crude oil is refined. Today, about US$1.4 billion would rehabilitate the four refineries and possibly debottleneck them over a period that is realistic; to increase the nameplate capacity above 445,000 barrels per day, bpd.
We have gone for anything and everything China in the last 10 years without studying the Chinese model of development for adaptation. Rapid development of the petroleum industry since the 1950s has made China one of the world’s major oil producers. China became self-sufficient in gasoline products in 1963; by 1973 the country was able to export both crude oil and refined petroleum products. China launched her economic reform in 1978. She had a shift from a government-controlled planned economy to a socialist market economy. This may be in line with what President Buhari may have envisaged when in October 2015, he granted financial autonomy to some Joint Venture (JV) oil companies, giving the JVs control over their budget, empowering them to source for funds and remit taxes, royalties and dividends to the government.
The JVs were to be turned into firms that control their own budgets, making them similar to the Nigeria Liquefied Natural Gas (NLNG) model, which finds sources for its own funding, pays taxes and royalties and also pays dividends. The NNPC would reduce its stake in joint ventures to below 50 per cent from 55 per cent by selling assets to local companies to bypass time-consuming National Assembly approval. Sufficient laws that would make it operate effectively, efficiently and profitably are now needed as the Petroleum Industry Bill; PIB is in its fourth legislative assembly. Our operators are still using the 1969 petroleum emergency decree of the civil war period. Our policy makers have been looking at appropriate pricing as an attraction to international investors in our downstream petroleum sector. But the ease of doing business and political peculiarities are considered to be near toxic; with no adequate legal and regulatory frameworks. It was time we had a Nigerian approach of syndicated loans from local banks and funds from our excess crude account to rehabilitate our refineries. International financiers would not take final investment decisions, FID on our Brownfield refineries unless they hold us by the jugular.