In his characteristic candour, Ibe Kachikwu, Minister of State for Petroleum Resources, had told Nigerians against the back drop of the crippling fuel scarcity that under the present circumstance, it is cheaper to import petrol than refine locally. With the mind-boggling figures perpetually bandied by the Nigerian National Petroleum Corporation (NNPC) for the ineffectual Turn Around Maintenance (TAM) of its refineries, the atmosphere has become too toxic for their return to optimum production levels.
Shortly after his appointment as minister, Kachikwu had issued a 90-day ultimatum for the refineries in Port Harcourt, Warri and Kaduna to rev into gear or be sold. What he saw at the end of his inspection of the facilities in the three locations in September may not have given him much cause for optimism. For over 15 years, the refineries had largely remained dormant with capacity utilisation never crossing the 30 percent mark. Kachikwu said up to N2.2 trillion is lost monthly to refinery inefficiency, a cost that obviously informed his December 2015 deadline for the refineries to justify the huge funds usually spent on TAM or be sold. Of course, they never met the deadline other wise the latest and most severe episode of fuel scarcity the nation ever experienced is just about receding.
The danger now is that as on previous occasions, we may walk the same deceitful path of NNPC vowing that its refineries will attain maximum capacity utilisation if more money, usually in hundreds of millions of dollars, is released for yet another phantom TAM. And the cycle of failed rehabilitation, another round of product scarcity and more importation will be relived all over again.
In 2014, the latest in the series of TAMs was initiated when over $1.6 billion was voted for the four refineries in the country. TAM has become the platform where NNPC and its cabal of oil sheiks have continuously ripped off Nigeria with nothing accomplished only for the government of the day to be blackmailed into flooding the market with imported products in order the avert public discontent against the same government.
The strategy was used with maximum effect on late President Umaru Yar’Adua in reversing the sale of the Port Harcourt and Kaduna refineries to Alhaji Aliko Dangote who had assembled a group of foreign investors with the promise to completely turn around both facilities and boosting their capacity. The privatisation had strong political backing in President Olusegun Obasanjo who acknowledged that the refineries had become a cesspit of corruption through which NNPC and the cabals held the nation hostage. Having campaigned on the promise of ensuring the respect for rule of law, Yar’Adua was sold the dummy that the sale of the refineries did not adhere to due process and he proceeded to cancel the sale and refunded the $750 million Dangote and his partners had paid for the refineries. It was a master stroke by the NNPC and its cohorts with the active collaboration of the leadership of the unions in the oil industry who threatened to shut down the oil industry with strike. A fine gentleman who genuinely meant well for the country, Yar’Adua buckled under the weight of the immense presure from NNPC and the unions.
He duly released the fund NNPC had sought for TAM on the refineries with the promise that they would all return to maximum production capacity afterwards.
Now that a measure of stability has been restored on fuel supply, the campaign for further maintenance of the refineries will soon resume.
The major argument of labour and opponents of privatisation of refineries is that they are too strategic to be handed over over to individuals and private organisations. We have yet to be obliged with a definition of the strategic nature of refineries that justifies the rape on Nigeria’s patrimony by NNPC and its partner cabal.
As a top rate technocrat versed in the dynamics of the oil industry, Kachikwu is best placed to initiate and superintend a privatisation process that will give Nigeria optimum benefit from the sale of the misfiring refineries. The quantum of losses the country has incurred in succumbing to the blackmail of retaining ownership and management of the refineries are too tragic to determine.
From the $750 million paid for the Port Harcourt and Kaduna refineries in 2007, their level of decay is such that they can hardly attract up to 50 percent of the amount in a fresh sale. With huge amounts released for the phantom TAMs since 2007 and the opportunity missed to modernise and expand capacity in the two refineries had their buyers been left to be, the harm done to the Nigeria could only have been wrought by evil men whose crime is worse than that against humanity.
The path to privatisation has always been strewn with blackmail, threats to life and outright inducement. But it is a path the country must thread. I am not sure how far President Muhammadu Buhari has toned down his command and control stance in the management of the economy. The future to reversing the gale of missed opportunities and the oil curse lies in government giving up control and management of refineries and creating a clement environment for the private sector to invest in building more refineries. More importantly, it is imperative for Buhari to give Kachikwu the free hand and support to chart a fresh course for the oil industry.
Pius Mordi
