The fuel scarcity that engulfed the nation this month causing untold hardship has been a regular feature in our national experience. Nineteen years ago, General Sani Abacha of blessed memory constituted a Government Study Team (GST) to probe the NNPC.
The team’s mandate included detailed examination of the major causes responsible for the intermittent closure of Nigerian refineries and shortage of refined petroleum products and to suggest remedies. The former maximum ruler and military strongman also asked his study team to suggest any other measures to improve the performance of the NNPC.
The team concluded, from its investigations, that the persistent shortage of petroleum products in the country was contrived by powerful interest groups of importers of petroleum products and exporters of intermediate products who strongly influence NNPC staff at refineries. “These groups have vested interests in ensuring that the refineries function at less than their respective optimal capacities,” the GST told Abacha.
To buttress its position, the team observed that while provision of US$400 million was made for the importation of petroleum products in 1996, total commitments for importation in the first six months of that year were US$451 million. “Regrettably, only about US$230 million was required to fully rehabilitate all the four refineries to enable them meet the consumption needs of refined petroleum products and even leave substantial margin for export,” the team stated.
The Abacha study team contemplated the future of the Nigerian oil industry that was clearly being sabotaged by “vested” interests and came out with an unflattering verdict. It said that “the chaos resulting from the indiscriminate award of contracts for the lifting of crude, the export of intermediate products and the importation of refined products to companies other than subsidiaries of NNPC combined to throw the development of a truly indigenous oil industry into confusion”.
Much of the confusion in the Nigerian oil industry that the study team identified 19 years ago is still with us. The refineries are still in a sorry state. Average capacity utilisation of the four refineries was reported to be as low as 10 percent sometime in 2003. NNPC, therefore, still depends on importation to meet domestic demand for refined petroleum products. The corporation’s appetite for importation is still much higher than its enthusiasm for fixing the ageing refineries; it still habitually sidelines its five subsidiaries that were established to export crude oil as well as intermediate petroleum products and import white products.
The study team recommended strict adherence to the established procedure for the selection of exporters or importers of crude oil and petroleum products. The procedure required that all applications be addressed to and be evaluated by the Executive Authority of the NNPC with recommendation to the Honourable Minister of Petroleum Resources (HMPR). This recommendation seems to have been ignored.
A measure of the success of the “vested interests” in making Nigeria depend perpetually on imported refined petroleum products can be gleaned from the report of an oversight visit to Kaduna refinery in January 2012 by the Senate Committee on Petroleum Resources (Downstream). The team, led by committee chairman Magnus Abe, reported that the facility that was supposed to produce bitumen and other petroleum products was producing only drums for oil companies. Abe and colleagues also confirmed that the Kaduna refinery paid salaries and allowances of about N12 billion yearly to staff that were practically idle.
Abe could not contain his displeasure. He said: “It is shocking that a refinery that was built less than 30 years ago, that has the projected production capacity of 110,000 barrels per day, is currently running at less than 35 percent capacity; it’s unfortunate that one of the asphalts plants has been converted into a drum-making plant producing containers for oil companies for a price that could simply be described as unfortunate. As we leave here, we are going to engage the Minister of Petroleum and the GMD to look for immediate solution to some of the problems of this plant and also to find out why the importation of crude for the other plant has stopped and, in fact, completely.”
Nigerians expect President-elect General Muhammadu Buhari to bring sustainable change to the oil and gas industry and end fuel imports forever.
Weneso Orogun
