Thursday, October 29, 2020
Home > EDITORIAL > Time to Privatize Nation’s Refineries

Time to Privatize Nation’s Refineries

 Previous Nigerian governments that built the four refineries for the nation in Warri, Kaduna, and the two in Port Harcourt, over time had lofty intentions for the country.

They envisioned plants that will meet the petrochemical needs of Africa’s most populous nation as well as enough for exports to states in West African sub-region and the rest of the continent.

However, due to Nigerians’ penchant for poor maintenance  and corruption in high places, these refineries   were neglected and left to rot over the years. Corrupt  politicians in connivance with dubious  government  officials  and  the managers of these plants  as well as  some leading  players in the  nation’s oil industry  found it more convenient and attractive  to  import oil rather than ensuring that these plants are kept functioning.

This ended in costing the nation huge amounts in foreign exchange with devastating  effect on   Nigeria ‘s economy.

Even     the occasional   Turn Around Maintenance  carried out for their repairs  did not make much  impact as   the plants  broke  down as  almost as soon as their maintenance  were  carried out.

As a result of this systematic practice,  Nigeria,  Africa’s largest oil producer, and the sixth in the world, overtime   became a net importer of petroleum products, the only country among the  leading  oil producing nations in this poor category .

A disturbing corollary of the moribund state of the refineries is that Nigeria today spends trillions of Naira to import finished petroleum products every year.  The nation, for instance,   spent  N1.13 trillion on premium motor spirit [petrol] importation between January and September 2019, according to a report  by the National Bureau of Statistics (NBS) . The report stated that the country  still largely imports petrol as the country’s refineries remain in a moribund state. Although there is a  decline in the amount spent on petrol importation into the country, the border closure did not have much effect as the volume of petrol importation rose  In that period. The data also revealed that N2.28 trillion was spent on the importation of the commodity in the same period in 2018. In all  the amount spent to import petrol dropped by N1.15 trillion, which represents a 50.33% drop.

Despite the  relative drop in the amount spent to import petrol into the country, further analysis shows that the volume of petrol importation in Nigeria is on the rise.

In nine months  ( from January – September 2019), the country  imported 15.5 billion litres of petrol, compared to 14.82 billion litres of petrol imported in the corresponding period of 2018. This means while the value dropped, the volume of petrol importation went upward.

We note with concern  that petroleum products have continued to form an important driver of Nigeria’s foreign trade, and efforts to stop its  importation by revamping the country’s refineries have continued to prove abortive.

We are worried by this trend of oil importation  by an oil producing nation like ours. It is in this light that we welcome the measures being put in place to stop the importation once and for all and to use the huge amount used for this so far for other areas of development.

In January last year [2019], the Nigerian National Petroleum Corporation (NNPC) stated  that it was committed  to  meeting its December 2019 deadline proposed by the Federal Government to end the importation of petrol.But because  the refineries remain moribund, and nothing meaningful was done to boost the nation’s crude oil refining capacit ,  the Federal Government  once again shifted the goal post as it moved the date scheduled for the nation to stop the importation of  refined petroleum products from 2019 to 2023.

According to Mele  Kyari, the group managing director of Nigerian National Petroleum Corporation ( NNPC), there is no justification for Nigeria to remain a net importer of petrol and other petrochemical products.

We expect more than rhetoric from him, as the principal officer in charge of the nation’s petroleum industries. However, we welcome the recent decision of the Federal Government to sell  its controlling shares in the  refineries to private organizations and individuals  with the aim of running them effectively. It is a big shame that our refineries remain moribund, thereby forcing the nation to remain a net importer of petrol.

In our view there is urgent need to revisit the privatisation of the refineries and we make bold to submit that the process should be hastened in the over all interest of the nation.

Nigeria cannot afford to continue on this  economic  self-inflicted injury, which the citizens are bearing the brunt with mindless fuel price hikes  longer than necessary. 

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