The recommendation is reform-minded and is in lockstep with several analysts, within and outside the oil sector, who for years have advocated the privatisation of the refineries and full deregulation of the petroleum downstream sector.
Besides, by importing all of the nation’s fuel requirements, we export jobs overseas and considerable pressure is placed on Nigeria’s meagre foreign reserves, as the import bill on petroleum products alone accounts for 30 per cent of foreign exchange demand in the forex market.
The savings that could be made by halving our importation of petrol to 20 million litres a day would therefore be N677.2 million ($3.4 million) a day or N247.2 billion ($1.236 billion) per annum.
But a caveat must be added: it would be foolhardy if the government feels that it can rest on its laurels just because the refineries are functioning today. Like all plants, the turn-around-maintenance and procurement of spare parts for the refineries must be carried out as and when due.
If this means granting the refineries some semblance of autonomy that would enable them to retain a certain percentage of their margins for this purpose, then this should be given consideration by the federal government. However, this should not be viewed by the management of the refineries and NNPC as a blank cheque to circumvent due process and the Bureau of Public Procurement (BPP) in the contracting process for the maintenance of the plants.
Another “quick fix” available to Buhari is for him to seize the golden opportunity presented by low crude oil prices to fully deregulate the prices of petrol and kerosene. With full deregulation, the incentive to defraud the system by oil marketers shall no longer exist.
Deregulation will also provide the enabling environment for the eventual partial privatisation of the refineries in 12 to 24 months time, hopefully by which time a decision would have been reached on the methodology to be used for the sale of the plants, and perhaps shares in the plants set aside for the staff of NNPC.
But before the federal government gets to that point, the labour unions must do away with needless sentiments over the ownership of the refineries. Eleme Petrochemicals Company, once wholly owned by NNPC, is a testimony that government can be grossly inefficient at running purely commercial concerns.
Today, Eleme is a highly profitable company that not only pays dividends to its shareholders, including NNPC, but generates foreign exchange for the Nigerian economy through exports.
There could be no better example for any union with the best interest of the country at heart.