Refinaries

By Kabir Fagge Ali
 
Presently, it is obvious that the time is ripe for the oil producing countries to smile due to the unprecedented increase in the oil price which eventually signalled an opportunity for a windfall. However, the situation is not the same for Nigeria as the country has plunged into deep fuel crises that has remained persistent for over a month. These crises border mostly on adulteration of the Premium Motor Spirits, PMS, also known as petrol, as well as its corresponding scarcity across the nation.

It can be recalled that, in the last three weeks, Russia has authorized a special military operation by invading the neighbouring Ukraine which caused the usually volatile crude oil prices to skyrocket beyond bookmakers. As a result, many countries are counting their fortunes in the windfall but unfortunately, Nigeria is counting its losses due to mismanagement of resources by the Nigerian National Petroleum Corporation (NNPC).

From the opening crude oil price of $76.03 per barrel at the beginning of 2022, prices have jumped to about $130 per barrel which is the highest price of the commodity for the last decade.

Just as noted in the Daily Trust Editorial of March 14, 2022, the gloom for Nigeria in the era of increased commodity prices was first forecasted by the world bank country director for Nigerian, Shubham Chaudhuri who said in January that Nigeria is at a point where rising oil prices might not be a good thing because although oil production might go up and crude oil revenue may increase, which in some point is a good thing.

The fiscal cost of petrol subsidy will also rise and while other countries may rejoice from the windfall, Nigeria will on the other hand be at the receiving end by reaping what it sows, courtesy of mismanagement of the oil sector over the past years by the NNPC. 

Truth be told, the consequences of the mismanagement of Nigeria’s four refineries is that the 440,000 barrels of crude oil supplied to NNPC daily for local refining is exported and never transparently accounted for. 

Meanwhile, the Group Managing Director, GMD, NNPC Mele Kyari claimed that N100 billion was sunk into the maintenance of the four refineries in Nigeria which is quite different from the N26bn already spent on supposed Turn Around Maintenance (TAM) on the maintenance of the refineries over the years which is an amount that will be sufficiently enough to build three new refineries as argued by many experts.

In addition, it is disheartening to learn that apart from being fleeced by NNPC and its collaborators in the name of oil subsidy or the strange term ‘under-recovery,’ Nigeria has failed to meet its oil production quota allocated by the Organisation of Petroleum Exporting Countries (OPEC). From an average of 2.1 million crude oil production quota per day, when the Buhari administration was voted into power in 2015, Nigeria is at present allocated 1.7 million per day, out of which it produces between 1.3 million and 1.4 million per day. This shortfall is a result of the lack of investment, as International Oil Companies (IOCs) have continued to exit Nigeria’s oil sector.

Despite the above scenario, the Ministry of Petroleum Resources, NNPC and its subsidiaries cannot convince Nigerians that there will be no gains from the current oil windfall. Such gains must not be frittered away under any guise.

The real question that is still begging for an answer is, can the NNPC convince Nigerians on how the country’s economy is not going to gain from this kind of oil windfall or how are Nigerian leaders being able to resolve this issue and what is NNPC’s decision on the lack of accountability to the people? 

Therefore, it is in the good interest of Nigerians that the National Assembly should investigate this issue thoroughly and ensures that money meant for the country indeed comes into the nation’s treasury unfailingly. The managers of Nigeria’s oil and gas sector must account for the gains that accrue to Nigeria from the current windfall.

Moreover, the NNPC in collaboration with the federal government and other stakeholders in the oil sector must as a matter of urgency expedite their efforts in fixing the moribund refineries in order to be functional enough to refine our petroleum products so as to meet the nation’s daily average consumption capacity of 62.5million litres of petrol. The time is long overdue to save the country’s ailing oil sector!

Fagge, is a student of Mass Communication Department, Skyline University Nigeria. He writes from Abuja, Nigerian and can be reached via faggekabir29@gmail.com

I support the removal of fuel subsidy with conditions attached for the government. I have known that fuel subsidy is giving corruption a legal garb. But IMF didn’t tell government the whole truth. For government that cares for its people, removing fuel subsidy should only be done after the following conditions are taken care of:

1- Repair the refineries. As long as the refineries are working, petrol will come at reasonable price to Nigerians. The transport, NPA, custom duty and throughput components of the price will be taken care of.

2- Stop importation of petrol- fuel subsidy is not the only way government wastes money. Fuel importation in the most corrupt and wasteful venture of the government. As at June 2021, Nigeria spent N1.09trn on fuel importation. It is the cause of the deteriorating value of the Naira and Nigeria’s biggest import, the cause of our balance of trade and current account deficits. In fact fuel importation is the major cause of Nigeria’s economic crisis. As long as Nigerians will buy fuel without subsidy, they will be subsidizing government corruption and inefficiency.

3- Address the macro-economic crisis facing the country especially exchange rate and food inflation. Life is unbearable for Nigerians and removing fuel subsidy that will increase price of petrol will add more hardship to Nigerians. Fuel price increase has negative multiplier effects on cost of rents, transportation, school fees and prices of goods and services. When Nigerians are down with excruciating economic problems why add more hardships on them by jerking up the price of fuel?

4- Provide effective transport system like rails, good roads and bus services. In Nigeria, only Lagos has public transport system, even at that Lagos does not have rail system. Abuja has no public bus system and the light rail only covers a small fraction of the town. You can live in Abuja for months without seeing the train because it covers few stops. Other Nigerian cities don’t have public transport system.

5- Improve salaries of workers. Even without fuel price increase inflation has made Nigerian workers paupers. Without commensurate increase in salaries people will be working for nothing.

6- Solve the deliberating security situation affecting the roads and villages. People have no livelihood because they can’t farm. People cannot connect with towns and do business because of insecurity. Bandits have overrun most states in the Northeast and Northwest and people can’t till their lands or rear livestock.

7- Reduce cost of bureaucracy. The minister of finance said government did not budget anything for fuel subsidy for year 2022. But ask her, how much does the government budget for maintaining political appointees and you will know that the government thinks of itself not the poor Nigerians. According to former CBN governor and former emir of Kano State, Malam Sanusi Lamido Sanusi, at least 70% government revenue is spent on officials.The money to be spent on the president, vice president, ministers and CEOs of parastatals and members of house of assembly is far more than the fuel subsidy they are talking about. That covers fat salaries, allowances, estacodes, new expensive cars and even planes. But they will not touch their welfare. It is the same at state levels.

If the government can address these it can go ahead and remove fuel subsidy, otherwise it will be punitive to make life unbearable for Nigerians. Even the rich are crying in today’s Nigeria.

Aliyu Nuhu: is a social analyst, he lives in Abuja.