…Says govt won’t invest in new refineries
Oscarline Onwuemenyi
16 June 2017, Sweetcrude, Abuja – The Federal Government has ruled out total deregulation of the downstream sector of the petroleum industry, stating that it is aware that any attempt to fully deregulate and effect an increase in the prices of petroleum products, especially Premium Motor Spirit (PMS), would have serious negative consequences for the entire country.
The Acting President, Prof. Yemi Osinbajo, who stated this in Abuja, at the 2017 African Modular Refinery Discussion, organized by the Modular Refineries Association of Nigeria, MRAN, also stressed that the federal government was no longer in the business of building refineries, noting that government could only provide the environment for private investors to invest in refineries in the country.
Osinbajo also blamed government’s involvement for the failure and near collapse of the Kaduna, Warri and Port Harcourt refineries, while he stated that in the new modular refineries initiative, oil producing communities would be made to acquire stakes in refineries set up in their locality, while the Federal and State Government would have some stakes in it, as well as private investors.
The Acting President disclosed that the Federal Government is committed to creating an enabling environment for private sector participation and investments in modular refineries, no, ing however, that it is aware of the challenges and complications posed by the non-deregulation of the sector.
In spite of the challenges, he stated that the Federal Government cannot afford to undertake a complete deregulation of the sector, as it would lead bring untold hardship on a vast majority of Nigerians.
He said the government had reached a conclusion that it would focus on moderating the sector and would continue to intervene to ensure it creates a balance.
He said, “There are those who are saying we need to deregulate fully. Why are they saying that; it is because if we do not deregulate, it is not cost effective for those who are producing PMS to sell. At the same time, if you deregulate completely, prices of everything else is going to go up.
“So there are those complications, meaning we got to moderate all those things; government has to come in at certain extent and this is what is currently going on to try and balance things up, because we cannot have, just overnight, another massive deregulation. If you do that obviously, the consequences would be very dire for the economy.”
On the failures of the country’s existing refineries in Kaduna, Warri and Port Harcourt, Osinbajo stated that the Federal Government had also ruled out building and managing refineries, declaring that it would only create the atmosphere for private players.
He said, “Government cannot just go and be setting up refineries. If government sets up refineries and uses its people to run it, it won’t work. We have good examples in all the refineries that we have seen. If you look at the refineries we have today, Warri, Port Harcourt and Kaduna, the primary reason they are not working today is that they are government-run.
“Government cannot do business. Government business is to create the enabling environment for business. And then government would put some investment into it. Government should not be in the business of setting up refineries all over the place; that is just a waste of time and resources.”
The Acting President argued that the country owed itself the responsibility of exploiting by itself, indigenously, the massive petroleum resources that it had, a fact, he said was responsible for the decision of the government to establish modular refineries across the Niger Delta particularly and wherever oil and gas resources are found.
He stated that in ensuring increased communities participation, people of the Niger Delta should not feel a sense of entitlement of participation.
“They are entitled not because they live in the Niger Delta, but they are entitled to it because they also have the brains, the resources to be able to make it happen and this is what I have seen from my engagement with people in the Niger Delta, they themselves are bringing in the investors; they themselves are talking to private investors, locally and internationally and they are bringing them here,” Osinbajo noted.