Nigeria is blessed with many natural resources to rival economically with the developed countries and the world superpowers. Its Black Gold (crude oil), for instance, is adjudged to be among the best – positioned side-by-side with the other oil-rich nations such as the Kingdom of Saudi Arabia, Kuwait, Iran and Iraq. This feat, expectedly, has earned the country huge production capacity such that it is ranked up until today the sixth largest oil producing nation in the world.
This, no doubt, comes with a lot of expectations, especially the need to be and remain the African champion and pillar.
In the era described as “oil boom”, the Nigerian authorities took good initiatives towards exploring optimally the country’s God-given natural potential. In 1965, the first refinery, with 38,000 barrels per day came alive in the country. The oil facility was sited at the remote but expansive land mass in Alesa Eleme, a Port Harcourt suburb in the Rivers State capital, South South Nigeria. Shortly after its establishment, the pioneer refinery capacity was raised to 60,000 barrels per day.
The flagship refinery 13 years after was followed by the second, in 1978. It was located in Warri, Delta State, also in the South South geopolitical zone, with an opening production capacity of 100,000 barrels per day. Not relenting, the authorities in October 1980 floated the third refinery, with a capacity of 100,000 barrels per day, in Kaduna, North West Nigeria. Still, the fourth and last government-owned refinery was completed in March 1989 at the same location as the first – Alesa Eleme – increasing Nigeria’s total refining capacity to 445,000 barrels per day.
However, over time, the narrative changed. Just as at when the undoings of the “mafia” began to manifest, the fortunes of the refineries were twisted as they became permanently ailing and it appears that the powers that will pull down the daunting clogs and check their influence would never exist! Sadly, unlike the previous description, Nigeria is today in an “oil doom” era!
The story is so sad and worrisome. For instance, findings and verified media reports as at
May 2018 indicated that none of Nigeria’s four refineries “worked up to 50 per cent of their capacity at any time in 2017”.
Disturbed by the misfortunes of the moribund refineries and sharp practices in the oil sector, the immediate past House of Representatives Ad-hoc Committee, which conducted hearings on the state of refineries and daily consumption of Premium Motor Spirit, popularly known as petrol, under the Chairmanship of Hon. Ganiyu Johnson, disclosed that an estimated sum of N11.350 trillion had been spent so far on rehabilitation (Turn Around Maintenance) of the ailing refineries! Regrettably, there is nothing to show for the humongous spending!
Another disturbing variable about the Nigerian refineries is the endless controversy surrounding the actual figure on the country’s PMS daily consumption. Not too long ago, the Nigerian Midstream and Downstream Petroleum Regulatory Authority floated a figure that Nigeria consumes 66.8 million litres of petrol daily and not 62.9 million, which was earlier quoted.
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Another agency, the Department of Petroleum Resources, in its latest statistics analysed that the daily PMS consumption rate was 21.45 million litres in 2002; 21.72 million litres in 2003; and 25.91 million litres in 2008. It showed further that the daily usage was 26.74 million litres and 29.81 million litres in 2009 and 2010 respectively. In February 2020, after a detailed study, the DPR concluded that the national daily PMS consumption rate was 38.2 million litres!
The knowledge of hindsight will surely provoke the hypothetical assertion that indeed there is nexus between the existing conflicting figures, the reason clamour for retaining fuel subsidy has been daunting and unrelenting and most critically the sorry state of the refineries.
Moving forward. It must be reiterated that the decision by President Bola Tinubu to announce total removal of subsidy, even to the charging of his allies and members of his incoming kitchen cabinet in his inaugural address, was consequential, yet, was courageous and promises to be prosperous in the future, the current attendant inconvenience, provided other variables that connect with the challenges in the nation’s oil sector are properly addressed. Transparency and accountability are also significant factors to run efficient and productive refineries.
Besides, the Petroleum Industry Act, 2021 is a good vista to remove the encumbrances in both the upstream and downstream sub-sectors of the oil industry. As signed into Law by the immediate past President Muhammadu Buhari on August 16, 2021, the Act represents the omnibus that provides legal, governance, administrative, regulatory and fiscal framework for the Nigerian petroleum industry and development of host communities.
The Act reviews the existing petroleum-related laws in a deliberate bid to comprehensively reform the Nigerian petroleum industry. It contains five different chapters, namely: Governance and Institutions; Administration; Host Communities Development; Petroleum Industry Fiscal Framework; and Miscellaneous Provisions, with seven schedules.
Gladly, the PIA Act requires Nigerian National Petroleum Corporation Limited and its subsidiaries to conduct their affairs in a commercial way, without taking recourse to government funds. The implications of this is that the oil corporation is expected to operate like a full-fledged limited liability company with the aim of delivering values, profits and dividends to its shareholders.
In the nutshell, the PIA Act is fashioned to demystify the needless monopoly which has been enjoyed for long by the old NNPC and projects the new entity, NNPCL, for real time business. In other words, to pave the way for its full privatisation and commercialisation. The results here include: having more willing, aggressive and business-like players to take over the ownership and running of the lame-duck refineries.
However, as an addendum to the PIA Act provisions, the President Tinubu-led administration should take further bold steps. For instance, the International Oil Companies doing business in Nigeria should henceforth be mandated to scale up their business operations. One of such instructive initiatives is to direct them to establish their own refineries in the country for refining of crude oil. This will come with its own multiple benefits: Other components of refining crude apart from petrol and diesel such as Jet A1, kerosene, black oil and asphalt will remain in the country, generate massive employment for Nigerians; and, perhaps, with the establishment of their own power plants, be able to supply neighbouring communities with power.
If we get to this level, the country stands to gain many life changing and everlasting social, economic and political benefits. Surely, the PIA Act and suggested ancillary approaches will generate employment, reduce the crime rate such as pipeline vandalisation, oil theft and militancy. Most significantly, it would develop the Micro Small and Medium Enterprises as the oil and power sectors require and involve other active players at the various levels of their operations. Ultimately too, other forms of insecurity such as banditry, kidnapping and insurgency will slide appreciatively. And there will be peace and prosperity in the country!
Finally, Nigeria’s refineries urgently need the same political will and audacity as demonstrated on the removal of the fuel subsidy by President Tinubu. The President should, and must, ensure the full implementation of the PIA Act and follow it up with the other result-driven policies. He should and must attend to all of these. Surely, they are the magic wands and more courageous steps to take to crush the “monsters”, the seemingly overwhelming clogs that have since milked the refineries and brought them down to their knees. The approaches are routes to having feasible refineries, attain economic prosperity and national rebirth.
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