The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, yesterday, warned that unless urgent steps were taken to immediately revamp the country’s refineries, they might become scraps in 2019, when the Dangote Refinery eventually comes on stream.
Speaking at the stakeholders’ consultative forum on the draft National Gas Policy and National Oil Policy in Abuja, Kachikwu stated that the country had no other option but to ensure that the refineries worked within the shortest possible time.
He said: “Refineries would have to work; it is really not an option anymore. And not only should they work, they have to work very quickly. The reality is that if we do not privatise and we do not concession — which is not what we are doing — then we have a responsibility to find private capital to get them to where they should be.
“This is because if we do not get them to work, in 2019, I can assure you that if Dangote system works well, we would have scraps, we won’t have refineries, because by then, it would be too late to do anything.”
He further called for concerted efforts to address the issue of cost of production in the petroleum industry, so as to bring down the cost to a reasonable and manageable level.
According to him, crude oil is still produced at $27 per barrel in Nigeria, adding that no decent country would produce at that amount at a period when oil price is unpredictable.
“There are lots of things we still need to address. Cost is a key issue. We are still at $27 per barrel. No decent country would produce oil at $27 per barrel at a time when the pricing is unpredictable. Again, we are going to try to get those figures below $18 per barrel,” he declared.
Kachikwu also stated that the Federal Government was committed to fully deregulating the downstream sector of the petroleum industry. He noted that the process has started, and since it is a continuing process, the government would continue to fine-tune it until it gets to where it should be.
He said: “At every given time in the history of every country, you will always have partial deregulation. The reason being that you have to catch up each time and make an amendment, and even if it is just one day, you might have some level of subsidy for that one or two days before it is removed.
“What is important is the goal post; where are we headed? Where we are headed is to try and free the industry, so that it can do its own rules, set its own prices itself. There are few mechanics that we still need to get in place properly. We can’t forget the fact that we still have foreign exchange challenges and that income to government is still very tight.
“You still have to find a way to balance that. But what is important is what the objective is. The objective is still to fully deregulate.”
In addition, Kachikwu lamented that a lot of things had happened in the petroleum industry for so long, that it has almost become accepted as a norm.
“There are no other parts of the world where policies are made like we do; where industries grow without any sense of direction and then we hope that somehow a higher power would show up and probably just solve it.
“If all we succeed in doing in the short period is all these policies, Acts and the Petroleum Industry Bill, PIB, and all the fundamental principal issues are dealt with, it is better. We have dealt with deregulation; we still have work to do to make sure we fine-tune that to keep it going.
“We have also dealt with subsidy removal. We began the process of exiting Joint Venture Cash Call. Hopefully, before December, we will get to a point where Joint Venture cash call would be a thing of the past, Kachikwu added.” – Vanguard.
