A Review of the Nigerian Energy Industry

Mixed reactions trail proposed sale of refineries

Kaduna refinery 126 November 2013, Lagos – Mixed reactions have continued to greet last week’s announcement by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke that the four government-owned refineries would be privatised before the end of the first quarter of 2014.

The Nigeria Union of Petroleum and Natural Gas Workers, NUPENG, cautioned the Federal government over the proposed sale to private investors.

According to the Union’s General-Secretary, Isaac Aberare, stakeholders in the country must be involved, if the plan will see the light of the day.

He also said that the sale of the refineries is not the solution to the massive importation of petroleum products into the country as the problem is government’s inability to carry out the Turn-Around-Maintenance, TAM, of these refineries over the years to make them function optimally.

He blamed the rot of the refineries on intrigues, power play, selfish interest and inordinate desire to protect the cabal importing fuel.

Aberare explained that the refineries are key institutions of the nation’s economy, which should remain in government’s control, for security and strategic reasons. He insisted that they should not be allowed to be sold to government cronies as was experienced in the power sector.

He reasoned that more refineries should be established in the model of the NLNG strategic partnership, and more investors given tax holidays and land. This is to enable them construct new ones just like the initiative of the Dangote refinery, instead of selling the nation’s assets as scraps to people.

According to him, ”We warn that the proposed plan should be done with uttermost care, because the Union will not fold its hands to allow its members to be thrown into the unemployment market that is already saturated.

“NUPENG and PENGASSAN must be involved in wide consultations on issues like this before going on air to pronounce their sales, in order to avoid industrial disharmony.

“The Union wants the government to focus on how to curb oil theft in the pipelines and consider our proposal for the creation of a Pipelines Protection Agency that will be fully saddled with the protection of the nation’s over 3,570 trunk lines crisis-crossing the landscape.

“NUPENG also calls for the speedy passage of the Petroleum Industry Bill (PIB) that is before the National Assembly to address these challenges facing the oil and gas sector to bring about transparency and accountability and stop chasing the shadows.”

Similarly, Mr. Folorunsho Oginni, the Chairman, Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, Lagos Chapter, also said the Union was opposed to privatisation of the refineries, as it would lead to increase of the pump price of petroleum products.

“More workers in the sector will be disengaged and this will not solve the problem of importation. What we need now is building of more refineries to boost production and not privatization of the existing refineries,” he said.

According to him, a country consuming more than 32.8 million litres of petroleum products per day could not depend on only four refineries; adding that more refineries would provide employment opportunities for the jobless Nigerian youths.

However, the Organised Private Sector under the aegis of Nigeria Employers Consultative Association, NECA, has expressed full support for the planned privatisation of the refineries.

The Director-General of NECA, Mr Olusegun Osinowo, argued that privatisation of the refineries was necessary to stop the deluge of petroleum products importation into the country.

He said the move will also check abuse of subsidy payments, which has no positive impact on the lives of Nigerians.

According to him, selling the refineries will put an end to the huge sum of money expended on their turn around maintenance. He added that the ills besetting the nation’s downstream petroleum sector would be addressed if the private sector is allowed to maintain the refineries.

Adewunmi Ilori, Managing Director, Metib Oil and Gas, said that the privatisation of the refineries would create more jobs for Nigerians.

“It is very sad that only two out of the country’s four refineries are functioning. When they are privatised, they will be more productive. With the success recorded in the privatisation of telecommunication and power sectors, we hope that if our refineries are privatized it will boost socio-economic activities in the country,” he said.

The Petroleum Minister had taken the nation by surprise when she said last week that Nigeria’s four refineries would privatised in the first quarter of next.

“We would like to see major infrastructural entities such as refineries moving out of government hands into the private sector,” Alison-Madueke said in an interview with Bloomberg TV Africa in London.

She also said, “Government does not want to be in the business of running major infrastructure entities and we haven’t done a very good job at it over all these years.

“We are right now undergoing a
major turnaround maintenance programme of the refineries.”

Towards the end of former President Obasanjo’s administration in 2007, the refineries were sold to companies owned by billionaire businessman, Aliko Dangote, and Femi Otedola, but the sell was reversed by the President Musa Yar’Adua government that took over from Obasanjo.

– Sebastine Obasi, Vanguard

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