NNPC refineries without fuel and the shame of a nation

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By Ifeanyi Izeze

Is it not ironic that the NNPC and its downstream oil subsector are kept alive thanks to government life support machines in the form of subsidies, and tragically, supposedly sensible Nigerians are still ferociously arguing in favour of continued draining of borrowed funds to pay for the illicit activities and dummy operations at the refineries in Port Harcourt, Warri, and Kaduna?

But for how long will government after government continue to bankroll the same refineries that should be the number one source of government revenue? This is the question every concern Nigerian should be concerned about. Can NNPC honestly tell us the monthly wage bills of these refineries’ workers that do nothing but receive humongous salaries and allowances?

Here we are talking about the country’s downstream oil subsector that rather than generate lots of revenues for the country as it is the case in most other climes, including our peer economies, is run in such absolute corruption that instead of refining petroleum products the managers connive with the “fuel –import rogues” involved in and around the Presidency to perpetually sabotage its refining operations.

The whole gist here is that there is no way we will continue to subsidise the running of state-owned enterprises like the refineries that are supposed to be the leading sources of revenue generation for the state. And there is no way we should allow them to continue to transfer their dubiously high cost of operation to Nigerian consumers of their products as a result of state enterprise monopoly.

It is not that we don’t know that this is true state of these refineries today. Of course, we all know that they have never worked and will never work. But the problem has always been who will have the gut to stop this by privatising these enterprises.

The question no government has ever boldly addressed is: for how long should what are arguably Nigeria’s flagship corporations, otherwise the economic engine-room continue to be run by incompetent cronies of every government in power, when handing them to private hands could have been the best way to make them more profitable, pay more taxes, innovate and compete locally and internationally so that petroleum products are made readily available to Nigerians at affordable prices?

Several concerned Nigerians have been publicly canvassing against the continued drain of the nation’s highly needed and scarce resources including the Peoples Democratic Party (PDP) Presidential flag bearer in the forthcoming 2023 presidential election, Atiku Abubakar.

Speaking recently as part of his agenda to overhaul the whole economy and position it for growth if elected president in 2023, he never pretended of his readiness to immediately privatise the country’s rundown refineries.

Like him or not for whatever reasons, at least he has a clear idea of the way to go towards rescuing the pathetic sate of the nation’s downstream particularly the refining subsector. As being proposed, Atiku’s refinery privatisation will come with two clauses. First clause will insist on a ten year review of the performance of the new owners of the refineries to ensure that they have been able to fully transform the refineries into high performing or else the refineries automatically return ownership to government. Second clause will insist on a spread-out local content within all the operation of the refineries, which means Nigerians will have contracts’ first offer of refusal.

Whether anybody wants to hear this or not, there is no way Nigeria should expect any serious economic growth with such moribund state owned enterprises. How do we intend to achieve the high economic growth we intended if we intend to continue keeping the moribund state owned corporations like the refineries on the same life support machines they have been for decades now.

With the much needed culture of competition, operational transparency, and profitability replacing the present mind-boggling inefficiencies and imperiousness that have made it almost impossible for these state-owned companies to perform optimally, the refineries will begin to work since privatisation replaces cronyism with competent and professionally more serious-minded administrators.

It is quite unscientific to continue to wrongly believe that the only way we could truly make petroleum products socially priced is for government after government to spend trillions of naira, including the current Buhari administration that now have been spending a whopping figure running into over N5 trillions annually under all sorts of jagons including under recovery, price differential repayment etc.

Let us agree that commercialisation is no better option. It is no better option here because, unlike most modern economies, where commercialisation meant that the day-to-day operations of state owned enterprises have simply made these enterprises profitable to the extent that rather than government subsidy, these commercialised enterprises have become major source of government tax revenue, Nigeria’s commercialisation will hardly end the deep rooted patron-client system that promotes corruption, incompetence, waste and high operations costs.

What this means is that with the same incompetent people in charge, corruption and mismanagement will continue to persist in the refineries. Besides, as a result of the commercialisation arrangement, state monopoly that brings no form of innovation in the subsector will continue at the detriment of the end product cost reduction.

Not even commercialisation will bring to end the inherent sabotage of the refineries by the “cabal” involved in fuel importation who connive with the managers of the refineries to ensure that the refineries are not producing petroleum products so that they are always imported with huge subsidies given to these importers.

We should not forget that commercialisation would equally amount to these refineries easily transferring their artificially created high costs of operations to the consumers who have no option or else they will threaten to go back to demanding government subsidising their day-to-day operations.

When there was no cost recovery, the NNPC clearly gave us the number of 33 and 35 million litres per day as the consumption of Nigeria. But now with the new regime of cost recovery, NNPC is claiming daily consumption of as much as 75 million litres per day as our domestic consumption. Can you see that!

So many of our international partners have said that even if we are feeding Nigeria, Cameroon, Ghana and Niger, we cannot consume more than 35 million litres per day. So where is the 60 -70 million litres narrative coming from? The answer is simple: from corruption! May God intervene in the affairs of this country, Amen!

  • Mr. Izeze is a Columnist with National Daily Newspaper and can be reached on: [email protected]; 234-8033043009