A Review of the Nigerian Energy Industry

Why we are against the sale of refineries – Labour

Pengassan04 February 2014, Lagos – Folorunsho Oginni, the Lagos Zonal Chairman of Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, spoke with Linda Eroke on why the union was against the planned sale of the nation’s refineries and the state of the Petroleum Industry Bill, PIB.

Now that the oil workers’ unions have reached agreement with the federal government that the refineries would not be privatised, at least for now, what next?

We are threading with what I can call caution. The planned sale of the refineries has been suspended by government after we strongly kicked against it. We thank God and the media for the role they played. People need to ask why we were against the sale of the refineries and why are we against this privatisation? I explained to a cross section of Nigerians when I appeared recently on a television programme. As we speak today, I stand to be corrected, that none of the so-called privatised companies has so far been making profit. We privatised Daily Times of Nigeria, as we speak today, Daily Times has never returned to the news stand. The story that we have been hearing and has been confirmed is that the people that bought the Daily Times of Nigeria have sold all the assets of the company. All the guest houses in Lagos, even the one in London, and all other assets have been sold off. The promise they made was that they were going to revamp the Daily Times and restore it to its place of pride. That never happened. If you ask what happened to NICON Insurance that somebody bought as a privatised company, today about 8,120 staff have been sacked and as we speak, they have not even gotten their entitlements. NICON Insurance has gone down. Air Nigerian, formerly Nigerian Airways was sold, as speak, there is no single aircraft that is flying in that fleet. When you go to the downstream sector of the Petroleum Industry, you talk of African Petroleum, you talk of formerly National Oil and so on. Before these companies were privatised, we were the custodian of the workers because they were our members. The number of PENGASSAN members in these companies were 8,520 but as we speak, they are less than 1,000 with 95 per cent of them being on contract, outsourced or casualised.

These are people who would promise government and the nation heaven and earth before privatisation, but after privatisation, these so-called new investors would destroy the companies. So, we have not seen any of the so-called privatised companies that is a success today. Yet some un-informed Nigerians would ask what about the GSM? We have continued to educate them that it was not NITEL that was privatized, people that operate the GSM companies today brought their money and set up their own companies. That is why you see them making profit and expanding. Till today, NITEL is moribund and has not been privatised.

Back to the refineries, we started the OGIC (Oil and Gas Implementation Committee) and our members were there representing PENGASSAN and NUPENG (Nigeria Union of Petroleum and Natural Gas Workers). It was a robust discussion and everything that needed in oil industry was discussed. The government came and said OGIC cannot work and discarded OGIC and said it was going to be Petroleum Industry Bill (PIB). We said no problem. But as we speak, they did not allow any of our members to represent the yearnings of oil workers or our input. We did not bother because since it is for Nigeria, we participated and still participating in PIB issues. Today, the PIB has not been allowed to see the light of the day. At the last sitting of immediate past Senate, the Senate President, David Mark told Nigerians that if they were able to return back to the senate, that the first bill they would attend to was going to be the PIB. After spending three years, the PIB has not seen the light of the day. The PIB has already taken into consideration all that is needed for our refineries to work and be a success story.

Again, we discovered that government wanted to rush the sale of the refineries because all the spare parts for the Turn Around Maintenance (TAM) are already on their way to Nigeria and will arrive any moment. That was why some people were pressuring government to sell the refineries as scraps so that when the spare parts come, they would take the spare parts to do the TAM and tell Nigerians that they have done the magic and that the refineries are now working. We have been talking about TAM for more than 10 years. Late General Sanni Abacha awarded the contract twice for the TAM, but nobody did anything in spite that the contract sum was paid. Till today, government has not apprehended anybody. We insisted that no, you cannot sell the refineries, you must wait for the spare parts to come, do the TAM and let us see what would happen next. But because they are people that want to reap off the nation from the sale, they were pressuring the government.

But the argument is that the private sector will manage the refineries better as Nigerian government has no history of successfully managed business enterprise?

We are saying that many of our so-called businessmen that we celebrate as successful in Nigeria are not really businessmen. All they do is to feed fat on public fund. The question is, why is the PIB not signed into law? Who is afraid of the PIB? These people know quite well that if PIB is signed into law, all these problems confronting the nation’s oil and gas sector will be addressed by the bill. These refineries we are talking about, they were built pre-1989 and those who built the refineries went back to the refineries recently and declared that the technologies used in those refineries had been phased out. What is stopping us from building more refineries? To build a refinery today is about 4 billion US dollars. We produce not less than 2.4 million barrel of crude oil on daily basis and we sell at 108 dollars which is the price all over the world. Going by that calculation, we are making about $41.2 billion daily. The next question you will ask is, where is this money going? When you look at our road, it is nothing to write home about. Education, you are living witness to when lecturers went on strike for over five months, electricity, we do not have and infrastructure generally, in every ramification, you cannot equate us with ordinary Ghana here. The question that is begging for an answer is, if you are making over 41 billion dollars daily, why is poverty still ravaging the country? Do not forget that we have the capacity to produce more than 2.4 million barrel per day, but because of ceiling by the Organisation of Oil Producing Countries (OPEC) which we are a member. Singapore is a country that does not have crude oil, they import, yet they have about 62 refineries. They buy the crude, refine and make huge profit. Why is it that Nigeria that has the crude cannot build more refineries? We have the manpower wasting because we are doing nothing, yet government says it cannot build refineries.

We had a meeting with them, they said no, because Nigeria is not running it well, Nigeria cannot build refineries. We told them that there is a panacea for that, go ahead and build even if it is one, one in each six geographic zones. Today, businessmen are building industries but they are not the ones running them. We can name many hotels that are springing up in Lagos and other parts of the country. If you go to Victoria Island and Ikoyi, most of the hotels you see there, the people that built them are not those running them. They gave them to those that have the managerial or technical know how. We told them this is a simple thing, build the refineries and if necessary take World Bank loan. The Bank would be very happy to give you loan to build it, then government can give it to those who will run it on its behalf and set a target. For instance, within four or five years, I want my money back. But they are not ready to build new refineries. Do you know why? If more refineries are built, there will be no more importation and there will be no more subsidy where their cronies and fronts have been reaping off the nation, those that finance their election for them to stay in government.

We told them that even the refineries are to be sold you must sit down with us as oil workers to discuss labour and related issues. The fate of the workers in the refineries is not the primary case, the issue is that we do not have reason as a nation to be importing fuel. The four refineries if they produced at 100 percent installed capacity; they will produce 18.2 million litres per day. But because of age and others, they cannot produce at such. In Nigeria today, we are consuming over 38 million litres per day and if you look at the gap between 38 and 18, it is very wide. This gap, nobody is talking about how to close it. But we are interested in importation and subsidy. Niger recently discovered oil and they have built a refinery.

When the President was asked, your country is a very small country, when you refine from this automated refinery, where will you sell the refined products? His response was that selling is not a problem. He said they have a ready market in Africa alone. When he was asked to substantiate, he said Nigeria is a big market for their refined petroleum products. What an insult to the so-called giant of Africa.

PENGASSAN and federal government agreed to develop workable business models for the refineries. Can you substantiate on this?

If you are conversant with the story of Nigeria Liquefied Natural Gas (NLNG), you will realise that today NLNG is producing and moving forward. What we have in mind is for government to do the TAM and then follow the NLNG model. Visit Port Harcourt or Warri refinery and see how Nigerians are using their ingenuity to fabricate and make the obsolete equipment in the refineries to function. The only problem is that the refineries are not working at installed capacities. We want to look at what happened at the NLNG and why it is today a success story. NLNG was not wholly privatized. What happened is that there is a strategic partnership with those who brought their money into it. They have 59 percent of the shares while the government has 49. We can do same with the refineries. What can be more insulting is that when the so-called committee to privatize the refineries was announced, no former minister of petroleum was a member, no serving staff or management of Nigerian National Petroleum Corporation (NNPC) was there, no member of PENGASSAN or NUPENG was there. That was a pointer that there is more to the so-called sale than meet the eyes.

The story of the defunct Power Holding Company of Nigeria (PHCN) is a very good eye opener for Nigerians. We were told that once it is privatized, there will be stable power supply. Today, Nigerians know better. Since the sale, Nigeria has been experiencing power failure unheard off since nationhood. The story is that those who bought PHCN are in Europe shopping for technical partners. It is obvious that they were not ready, are incompetent and to worsen the matter have not even paid completely for the assets they bought. This is how our leaders have been deceiving us. That is why we the oil workers are saying that we will not allow the refineries to go the way of NICON Insurance, the way of Air Nigeria, the way of Daily Times and others.

We told government to apply the strategic partnership in Eleme Petrol-chemical, they refused. Do you know that the people that bought Eleme Petrol-chemical did not add a kobo to the company? We stand to be corrected because it is our members that are working there. At the time of sale, the spare parts to revamp Eleme Petrol-Chemical had already been there and our government went and sold it as scrap. When the new owners came, they did not bring any foreigner or expatriate, it was our members working there that were used to fix all the equipment and spare parts. After fixing it, they were released and they are now back in NNPC. Today, Eleme Petrol-Chemical is working and making huge profit. The Rivers State Government has a large share and others including our members. What I am telling you is that there was no magic that these people did there, they (Indians) bought it as scrap and used the spare parts already in the warehouse to fix it and today, Eleme is a success story. That is why we have been saying that if government can remove its hands from the running of NNPC, the NNPC and the refineries will be profitable. Take for example, within the last five years, if you count the number of Group Managing Directors that have been appointed to run the NNPC, it would shock you. This has continued to create policy inconsistency and leadership instability. You have the policy you are running, immediately they remove you and appoint another person, the policy dies and the new man introduces his own policies.

There are insinuations that the government stoppage of the privatisation of the refineries is to avoid a confrontation with oil workers ahead of 2015 election and that if President Jonathan returns in 2015, the government will definitely privatize the refineries. What is your take on this?

Well, we only suspended our planned strike over the privatization. It was carefully chosen and that was why we used the word suspension. Our major concern is that let those spare parts come and let the TAM be done. The government has agreed with us on that. I bet you, after the TAM is done, Nigerians would rise up to say there is no point selling those refineries. We are aware that government has a penchant for breaching agreement, hence nobody will have an agreement with government and go home to sleep. As such, as oil workers, we are strategizing. The government signed agreement with the Academic Staff Union of Universities (ASUU) in 2009, it was never implemented until the lecturers went on strike in 2013. We all saw what happened. We are not sleeping as far as this issue is concerned and any area that government wants to come out, we are ready. But we are not saying that we are averse to discussion. We are ready for discussion.

What has happened to the reported committee on the privatization of the refineries?

When we got to the meeting with government, government officials refused to confirm the existence of the committee. In my place, there is a saying that if you abuse the king at the back, and you are taken to the king. When you get to the king, the king asks you if you have been abusing him, you deny ever abusing the king, the case dies a natural death. So, since nobody confirm


– This Day

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