- Kachikwu was right about fuel import but what next?
It is no revelation. Informed persons and organisations in Nigeria and abroad have stated that and much more, time and again. Still, the recent declaration by the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, that the country’s importation of petroleum resources is “a fraud on the system” is rich in significance, given that he was speaking, as it were, from the pulpit of authority.
Rarely has any official of that calibre spoken openly with such candour about the dysfunctions in an industry that lies at the vital core of the nation’s economy. The importation is a gigantic swindle that has gone on for more than two decades, despite the manifest illogic of a situation in which a country that has four refineries and is one of the world’s leading producers and exporters of petroleum has had to import finished products, in a process as transparent as a concrete wall.
The fraud has been well documented by a committee led by Nuhu Ribadu, former chair of the Economic and Financial Crimes Commission (EFCC). The refineries are deliberately crippled to ensure that they cannot produce enough for local consumption, therefore making importation to bridge the gap inevitable. More by design than default, the gap has been growing wider and wider, necessitating bigger and bigger fuel imports. Virtually everyone who knows someone secured a piece of the immensely rewarding market in fuel imports.
Licensees, armed with fake shipping documents, filed claims for fuel that was never delivered, and conniving officials handed them huge payouts, based on the price differential between the local cost of the product and the dollar cost in the international market. Products of the anaemic refineries were loaded on to ships as if for export; the ships turned round in mid-ocean, only to berth with the same fuel and register it as an import.
The well-connected reaped fortunes from this fraudulent enterprise, even as the nation was almost bankrupted by payment of so-called subsidies for oil imports – subsidies that seemed to grow bigger the more they were cut. Sadly, most of those involved in this nefarious traffick are yet to be brought to justice.
The fraud–ridden process continues, even now, as shortages and rumours of shortages of refined products proliferate. The cracks that made it possible have not been sealed.
Unless this scandalous arrangement is ended, Dr Kachikwu warned in his address before the Nigeria Oil and Gas Conference, in Abuja, not much progress could be expected in the oil and gas industry.
The warning is not new. What makes Dr Kachikwu’s admonition different is that he has set a target date for ending the running fraud. Importation of refined petroleum products must end no later than 2019, he said.
The refinery now being constructed in Lagos by the industrialist Aliko Dangote is expected to come on stream in 2018. At full capacity, it will produce more than enough to meet demand.
Until then, however, the nation can ill afford the shortages and rumours of shortages of fuel that paralyse economic and social life ever so often.
Everything must be done to meet Dr Kachikwu’s target date. The comatose refineries will have to be revived and made to work at or close to full capacity. Officials must now think beyond the turn-around maintenance schedules that cost a fortune but turn little around even in the short term. Plans to install modular refineries to augment the older ones must be faithfully and promptly executed.
Leakages in importation and distribution will have to be plugged, and smuggling of refined petroleum products will have to be curbed.
