A Review of the Nigerian Energy Industry

Buhari says subsidy regime is unjustifiable

Muhammadu Buhari, former Nigerian military ruler and presidential candidate for the Congress for Progressive Change (CPC) speaks during an interview with Reuters at a private residence in Lagos February 19, 2011. Buhari, the main opposition candidate in Nigeria's presidential election, said he was optimistic it would be a more credible race than in the past but warned events in north Africa showed people would no longer accept a rigged vote. Picture taken February 19, 2011. To match Interview NIGERIA-BUHARI/  REUTERS/Akintunde Akinleye (NIGERIA - Tags: POLITICS HEADSHOT)
Muhammadu Buhari, Nigeria’s President-elect

Says “You can’t defend these corrupt people”

Oscarline Onwuemenyi

25 May 2015, Sweetcrude, Abuja – As the nation’s energy sector has been thrown into chaos as a result of the shambolic management of the subsidy system by the President Goodluck Jonathan administration, leading to probably the worst petrol scarcity in the country, the President-elect, Muhammadu Buhari has said there is no justification for the present subsidy regime in the nation’s oil and gas industry.

Buhari, who stated this in an interview with Daily Trust, expressed reservations over claims by the government of subsidizing the petroleum sector.

According to him, “I would like to be on ground and find out what really has been going wrong. Why is it that people are doing round-tripping with the Nigerian products and taking money from the treasury? Some people are still in court. You know about it. So, I’m not taking anything for granted. But I will try and find out what went wrong.”

He spoke on how during his time as military leader, they were able to make fuel available at all times.

He stated that, “One of the problems I have, other than the military, is the petroleum industry where I served for three and a half years under General Obasanjo.

“When people start talking about this subsidy I honestly get confused. I will tell you this, and I hope it will answer what you want to know. Back then we had a refinery in Port Harcourt, which was refining 30,000 barrels a day of Nigerian crude. Later, it was upgraded to refine 100,000 barrels a day.

“Another refinery was built in Port Harcourt to refine 150,000 barrels per day of Nigerian crude. So, Port Harcourt alone had the capacity to refine 250,000 barrels per day of Nigerian crude. But when I found myself as the Minister of Petroleum I set up another refinery in Warri for 100, 000 barrels per day of Nigerian crude and the Kaduna refinery a 100, 000 barrels per day. So Nigeria built capacity to refine 450,000 a day.

“Four Hundred thousands of which is purely Nigerian crude, but 50,000 was imported. The type of crude could be Venezuelan, which could be a bit heavier. But the lighter ones – kerosene, aviation fuel, diesel, PMS of different grades could be produced from our crude because Nigerian crude is about the best in the world. If you could recall, after finishing as Minister of Petroleum, I subsequently became Head of State.”

Buhari added that, “You remember, I appointed Professor Tam David West as the Minister of Petroleum. When we rounded up bunkers, collected their illegal jetties and allowed jetties for only big firms which were doing production and development in the country, we were shocked that we had too much fuel.

“We had to begin to export 100,000 barrels per day. Don’t forget that we didn’t stop at building refineries, we built more than 20 depots during my time, from Port Harcourt to Ilorin, Makurdi, Suleija, Maiduguri and Kano. More than 3,000 pipelines were laid to connect them. A number of stations were also built to take the trailers off the road, save lives and the infrastructure on the road. It is more economical because each trailer uses fuel.”

The President-elect observed that the country achieved all that without borrowing any money. “We did all that in this country and we didn’t borrow any money as far as I know. It’s Nigerian money. From each Nigerian crude, whether Akwa Ibom,
Bonny Light or whatever it is, you can work out how much products it will give you; how much petrol it will give you; how much diesel it will give you if you want to produce diesel.

“We could tell how much Nigerian crude cost, the cost of transportation from there to the refinery, the cost of refining, the cost of transportation to the pump stations and maybe 5 per cent go for overhead.

“I can understand if Nigerians pay for those cost but somebody is saying he is subsidizing Nigerians. Who is subsidizing who?,” he queried.

Buhari also dismissed arguments by some that the price of petroleum products should not be the same in different parts of the country, noting that, “It has to be the same because it is the Nigerian crude.”

On the cost of transportation, he said, “Why didn’t it make any difference when we were around? Why did we build the network of pipelines? Why did we build the network of depots? What can Nigerians benefit from the God-given gift of petroleum? No refinery is built unless there is an in-depth research that there is enough reserve of up to six layers to be produced.

“You can’t defend these corrupt and incompetent people. You can’t defend them. There used to be what they call turn-around-maintenance. You close the refinery in order to overhaul and clean it. What we did: we asked our producers, we need various refined products of this type at this time when the refineries are being cleaned. Take this type of Nigerian crude and bring us the refined products. What we don’t need, we will calculate and pay you as fees for refining and transportation.

“If it is more than what the crude can handle, then we take it from the treasury. But you are trying to justify all these frauds by saying the refineries are aged.”

He added, “They said the refineries are aged. The pipelines are leaking. There is vandalisation. Who ordered the vandalisation?”

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