‘Why Buhari won’t sell refineries’
STRONG indications have emerged in Abuja that President Muhammadu Buhari may not be in a hurry to sell Nigeria’s three refineries.
It was understood he may not do so because it may place the economy in the hands of the private sector and lay it open for possible exploitation which may bring hardship to poor Nigerians.
Meanwhile, expectations are soaring that Nigeria may begin to enjoy the benefits of crude oil resources following the leadership change and restructuring at the Nigerian National Petroleum Corporation (NNPC).
Stakeholders in the oil and gas industry are of the opinion that in order to make a remarkable impact, the new heads at the NNPC would have to vigorously pursue the Federal Government’s aspiration to transform the industry, especially the NNPC into an integrated oil and gas company by introducing policies and strategies that will improve crude oil production.
A source told The Guardian: “The thinking of this present government is to minimise waste through prudent management of resources and tame corruption. The appointment of Dr Emmanuel Kachikwu as Group Managing Director of the NNPC is meant to achieve his aim of zero tolerance for corruption in the operations of subsidiaries of the NNPC.”
The Guardian gathered that the President’s decision might have been buoyed by the feat of local engineers who successfully carried out the Turn Around Maintenance (TAM) of the ailing refineries after the original manufacturer turned down an offer to rehabilitate them.
It was gathered that the President is convinced that corruption is at heart of the ailing refineries and that good and efficient management could return them to summit of their installed capacity. may be avoiding an early collision with Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), which has continually opposed the sale or outright privatization of the refineries.
Stakeholders fault past management of refineries
Speaking recently, the National President of Nigerian Association of Energy Economics (NAEE), Prof Wumi Iledare said the approach government has adopted to manage the refineries or seek investment have been wrong.
He explained that government ought to issue simple ‘permits’ as against making them buy licenses, which cost so much money.
Specifically, Iledare argued that building of new refineries would have a multi-dimensional layer in creation of jobs and business opportunities .
His words: “Government should not give license for building of refineries, but should give permits instead to people that want to build refineries based on environmental impact assessment, technical capabilities and financial resources. There should be a tenders board to evaluate the claims for that purpose and the Nigerian people must also know the owners of the planned refineries.
Above all, there must be consistency in policy by the Federal Government.
Those who got licenses did so because government said it was selling off the refineries and efforts were on to remove the subsidy, which was an incentive for the private sector to move in and take advantage of the liberalized environment.
But halfway, government reversed itself on the sale of the refineries. The people who had obtained licenses were left with licenses that felt like ‘heavy rocks’ in their hands as the licenses became useless to them,” he explained.
While it has raked in billions from prospective builders of refineries , Iledare insisted it was morally wrong on the part of government to make money from those who are willing to provide jobs and contribute meaningfully to the economic development of the country.
Expectations of new NNPC’s directors
Speaking with The Guardian, first President of Polymer Institute of Nigeria, Chief Kunle Ogunade, commended the reforms at the NNPC by Buhari, saying: “It is good we have technocrats who are experienced and are abreast with happenings in the oil and gas sector.
The new team should ensure the country’s refineries are running at maximum capacity to meet local demand for fuel. The gap can be filled with crude oil swap agreement so that the country will no longer pay subsidy on petroleum products. We don’t have any reason to continue to pay so much on subsidy.
“About 80 per cent of our various polymers are imported. We must pressurise our government to build more refineries to make these necessary materials available in the country.”
He also expects the revival of the country’s petrochemical plants in Warri and Kaduna, which he said, have been moribund for several years.
Ogunade noted that the petrochemical plants would be able to take care of the production of fertiliser and raw materials for the plastic manufacturing company. “Though, we have Eleme Petrochemical, it is not enough to products all the petro chemical products that the country currently imports.”
He stated: “We need at least 10 petro chemical plants in the country for various polymer products.
At present, Indorama is limited in some areas. There are many polymer materials that are imported into the country, which should have been produced in Nigeria. The foam industry depends on imported polymer products , as do pet bottle and companies There is need to have a petrochemical plant for TDI . These products can also be used by the pet bottling companies. You can imagine the amount of table water that is being produced in the country.
“There is need for Polyvinyl Chloride (PVC) manufacturing plant as the products have huge market in the country. Pressure pipes, waste pipes and many other pipes are made from PVC. We can go on and on. Polymer products are also required in the textile industry”.
He also stressed the need for the new management team to curtail the activities of crude oil smugglers and thieves and work towards increasing the country’s reserves, which are at present in decline due to the low investment in the sector.
Also, Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, stressed the need for transparency in the management of the country’s oil and gas resources.
He stated: The NNPC is a strategic institution but has been a platform for leakages. He should know that the economy significantly relies on the oil and gas industry, and for the economy and people of Nigeria to have full value of that sector; whosoever is in charge must be relevantly sincere and ready to support economic growth.
The new heads at the NNPC are expected to face series of challenges, which include pipeline vandalism, improved Joint Venture funding.
Pipeline vandalism had reached an alarming magnitude, since the late 1990’s as the NNPC witnessed between 450 and 1,000 cases of vandalism annually. The high rate of vandalism had obstructed the supply and distribution of petroleum products (both crude and refined) during the period in review.