Still smarting from the rumpus engendered by Federal Government’s recent hike in the pump price of fuel from N86.50 to N145 per litre, Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has said the FG was targeting 2019 as the year the country would end massive fuel importation. “For the first time, I am putting so much strength in terms of what do we do with our refineries, because that ultimately is the solution.
I must make the refineries work so that the staff can justify their work. I am going around looking for investors to come in a joint venture basis to put in money into the refineries and make them work…. ”, he stated at a recent public function in Lagos. The minister said by the time the refineries were working at optimal capacity; and the commencement of production by Dangote Refinery in 2019, Nigeria would be able to refine 1.4 million barrels per day.
The FG, he says, targets to increase the current production capacity from 2.2 million barrels per day to 2.6 million barrels within the next few years. Kachikwu said fuel subsidy regime was no longer sustainable because of various fraudulent practices by oil marketers and other players in the sector. Between 2012 and 2015, Nigeria paid almost N8 trillion as subsidy, monies that could have been used to provide critical infrastructure for citizens, he revealed; reiterating his conviction that the liberalisation of the downstream oil sector would encourage competition and force down the pump price of fuel in coming months. It is, indeed, a great relief that the FG has at last seen the sense in growing local refining capacity and liberalising the downstream oil sector as the panacea for the perennial fuel shortage crisis and incessant increases in the pump price of fuel.
This has been the position of many since the return to democracy in 1999, considering the nation’s privileged position as one of the world’s major producers of crude oil; as well as the fact that other oil-endowed nations, a good example being Venezuela, and even others not endowed, have been striving hard to add value to crude oil through the improvement of local refining capacity. Indeed, that the FG is just realising the need to rest the regime of frequent increases in the pump price of fuel passed off as subsidy removal; radically grow local refining capacity and perhaps, sincerely liberalise the downstream oil sector, seems an indication that the government knew the solution to the problem all these years but chose to play the ostrich.
Indeed, the government of former President Olusegun Obasanjo sold one of the refineries, insisting that the decision made a lot of economic sense at a time. But the facility was retrieved by the government of the late President Umaru Yar’ Adua. During the era of President Goodluck Jonathan, the refrain, from the ex-President himself to former Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala; as well as the erstwhile Minister of Petroleum Resources, Mrs. Diezani Allison- Madueke, was that making the nation’s refineries work and the building of new refineries were not profitable to the nation.
But it was obvious that humongous corruption was the major reason the nation’s refineries collapsed in the first place. Their prostrate condition was thereafter sustained by additional grave corruption perpetrated through massive oil subsidy theft and past prodigal governments that regaled in profligacy without an eye on tomorrow or the diversification of the nation’s economy. There is no doubting the fact that the FG presently arrived at a better option as the way out because of the slump in oil prices, the dearth of foreign exchange and the crushing multiplier effects on the value of the naira, the Nigerian economy and living conditions. It is obvious the FG became weary of relying almost wholly on imported fuel brought in by a cabal, cronies and corrupt oil sector officials that thrived on huge subsidy frauds because of dwindling foreign exchange.
May it be hoped that the government will not revert to the fraudulent subsidy regime once it swims out of its current financial quagmire. The FG should sincerely create a hospitable environment for a private sectorled club of local refiners, since there is no guarantee that the nation’s four refineries will perform any better under government’s superintendence. Honest liberalization of fuel imports should, however, be encouraged to guarantee supply in the meantime.
