Imperatives of privatising Nigeria’s refineries – Punch

Petroleum Minister Diezani Alison-Madueke’s curious claim that the fears of workers’ agitation were holding up the planned sale of the country’s ailing refineries betrays an attitude of a government willing to justify its deliberate refusal to act in the overall interest of Nigerian citizens. This is hardly a tenable explanation for inaction, especially in a major oil-producing country where the importation of refined petroleum products is preferred to local refining, a choice that has resulted in periodic artificial scarcity in the midst of plenty.

Although workers have threatened to oppose the sale, which is natural, this should not be enough to cow the government into submission. If the government could not give in to electricity workers’ threats and opposition to the sale of another notoriously corrupt and inefficient public organisation — the Power Holding Company of Nigeria — there is no reason for the situation to be different now.

Nigeria’s four refineries at Port Harcourt, Warri and Kaduna, under the management of a government firm, the Nigerian National Petroleum Corporation, have been perennially producing at an average of 22 per cent capacity. Rather than further the interest of the nation, the refineries, initially designed to take care of Nigeria’s local fuel consumption and even spare some for export, have been turned into conduits for siphoning public funds.

Under the guise of effecting turn around maintenance, huge sums of money are frequently appropriated, much of which end up in private pockets. This is believed to be so because, after allocating the money, the fortunes of the refineries are rarely ever affected positively. The last amount that was earmarked for the TAM of the refineries last year was $1.6 billion, with the promise by the minister that it will drive their capacity utilisation up to 90 per cent from their current levels of between 18 and 22 per cent.

Needless to say, the people suffer untold hardship and the economy huge losses as a result of Nigeria’s inability to refine petroleum products locally. Apart from the drain on foreign currency, dependence on importation helps to sustain jobs abroad, while the unemployment situation in the country continues to worsen. Experts say that there are over 100 by-products derivable from crude oil that we cannot exploit because Nigeria lacks the capacity to refine locally and would rather prefer to export crude.

Nigeria also loses a lot of money through a fraud-induced government subsidy scheme. Two years ago, after the mass protests that followed the government’s surreptitious introduction of petrol price increase, probes were ordered, which revealed that over N2 trillion of public funds had been stolen through corruption in the subsidy administration. The amount involved was more than 50 per cent of the country’s budget. In this year’s budget, N971 billion has been earmarked for subsidy payment, despite the promise that the refineries would function optimally after the $1.6 billion injected into the TAM.

Experts have agreed that the only way to eliminate the inefficiency and significantly increase capacity utilisation of the refineries is to transfer their ownership to the private sector. Privatisation will also remove the massive corruption and looting of public funds currently taking place through the refineries.

Unfortunately, nearly seven years after they were initially sold and the sale reversed, ostensibly to address complaints about the lack of transparency in the transaction, the succeeding government of President Goodluck Jonathan has found it difficult to state clearly its stand on the refineries. After years of prevarication, Alison-Madueke stated late last year in London that the sale of the refineries, which is an important component of the government’s economic programme on privatisation, would be completed by the first quarter of this year. Her statement, which certainly captured the government’s position on the matter, was to be sharply contradicted days later, through a statement by the presidential spokesman, Reuben Abati, saying the refineries were not for sale.

Curiously, Alison-Madueke rightly reiterated last week that “the only way forward is the privatisation of the refineries because the government should not be involved in the business of fuel sales.” Her claim that the sales were being delayed because of the fears of workers’ resistance, however, raises questions about the sincerity of the government, especially considering the back-and-forth stance of Abuja on the issue.

Rather than shy away from taking a bold decision that will benefit the whole country, what the government and the Petroleum and Natural Gas Senior Staff Association of Nigeria and the Nigerian Union of Petroleum and Natural Gas Workers should be doing now is to negotiate the benefits due to them when the refineries are sold. Now is also an opportunity for them to update their knowledge because, like the power sector workers, they are still the ones that the new owners would rely on to run the refineries. On no account must they allow their narrow personal interests to hurt the country.

On its part, the government should move without further delay. Failure to do so, because of opposition by workers or other vested interests, will amount to bending over backwards to sabotage the implementation of an important component of its own privatisation programme.

 

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