NNPC’s Approach To Ending Fuel Imports
At last the Nigerian National Petroleum Corporation (NNPC) has officially shifted the deadline for ending Nigeria’s shameful dependence on imported refined petroleum products. Ibe Kachikwu, the immediate past minister of state for petroleum who once doubled as group managing director of NNPC had promised in 2016 that he would end refined petroleum imports by 2019.
Ironically by the time he left office on May 29, 2019, Nigeria was reportedly importing more refined petroleum products than Kachikwu met. Last week, Mele Kyari, NNPC’s new group managing director made a pronouncement that suggested that the deadline for ending fuel imports has been shifted to 2023.
“We will transform Nigeria into a net exporter of petroleum products by 2023”, Kyari vowed in his speech at the valedictory session in honour of Maikanti Baru, his predecessor. Unlike Kachikwu’s Herculean deadline, Kyari’s new target for ending fuel imports sounds more relaxed and realistic. Kachikwu was apparently hoping that Dangote’s refinery in Lagos would come on stream by the first quarter of 2019. Scores of technical hitches made the deadline illusive thus pushing Kachikwu’s promise into the long, winding list of the current administration’s failed promises.
Unlike Kachikwu, Kyari stands a better chance of delivering on his promise not because he would be more proactive but because the scene is set for that target to be met.
Dangote’s refinery would almost certainly come on stream in 2020. With the capacity to refine 650, 000 barrels of crude oil per day, the refinery is about 130 per cent of Nigeria’s four ailing refineries. It would feed the domestic market comfortably and even allow for the export of some excess products.
Besides, three modular refineries are expected to come on stream between now and 2020. They would increase Nigeria’s refining capacity by at least 100, 000 barrels of crude oil per day. By 2023 a few more of the modular refineries would have joined the league and made Nigeria comfortable as an exporter of refined petroleum products. That sounds reassuring.
However, we are not comfortable with the means for achieving the deadline. Kyari still believes in the rehabilitation of the four ailing refineries as a means of ending fuel imports in Nigeria.
“We will deliver on the rehabilitation of the four refineries within the life of this administration…”, he assured. That amounts to relying on a failed strategy to solve a monumental problem.
From all indications, NNPC lacks the financial muscle and managerial acumen to rehabilitate and run the refineries efficiently. In the last four years government had gallivanted from privatisation to joint venture partnership as solution to the ailing refineries. It is time government faces the reality on ground about the fate of the ailing refineries.
Many Nigerians are convinced that privatisation is the only sensible way out of the quagmire in the downstream sector of the oil industry. Those who think that the downstream sector of the oil industry is too sensitive to be controlled by the private sector should be reminded that the telecoms industry is even more sensitive than the refineries. At the moment the federal government does not have any holding in the telecoms industry. It is only a regulator easily manipulated by powerful operators.
The federal government has gambled long enough in the downstream sector of the oil industry to be convinced that it is a colossal failure as an operator and regulator. The solution to the bottomless pit that the refineries now constitute is for the federal government to sell them as they are and restricts itself to the noble role of a regulator. It just cannot serve two masters by doubling as operator and regulator.
That is one thing that Kyari as new managing director of NNPC should have in mind as he takes the saddle. He does not have the time to gamble like Kachiwu did. The scene is set for Nigeria to eventually quit the infamous club of refined petroleum products importers. Even if NNPC’s four refineries remain as dormant as they are now, fuel imports would end in less than three years.
The only problem is that NNPC stands to lose everything if it ignorantly and arrogantly refuses to do the needful. With the coming on stream of Dangote Refinery the federal government would simply dump the refineries as no one would need them any longer. That is what government did to Nitel.
The next losers would be members of the National Union of Petroleum and Natural Gas Workers of Nigeria (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) working in the refineries.
The two unions are adamantly opposed to the privatisation of the refineries. Their position is a myopic defence of their jobs even at the expense of Nigeria remaining an eternal importer of refined petroleum products. They would lose those jobs ignominiously like Nitel workers if they resist the privatisation of the refineries.
The option is for government to enter into a deal with NUPENG and PENGASSAN, agree on an affordable severance package, sell the refineries and get out of the downstream sector of the oil industry. Government would gain something and the workers would lose nothing.
SOURCE: independent.ng