Why our refineries must work
By Bunmi Balogun and Aliu Mohammed
OIL, that product popularly referred to as black gold by its merchants has been a blessing to Nigeria. Since it was first struck in the early 50s some- where in Oloibiri, Delta State, the product has sprung Nigeria from a struggling independent nation to an economically dependent and buoyant country. With oil money, Lagos, the nation's first capital city was built to a befitting status comparable to any other nation's capital. When the capital moved to Abuja, oil money has also been used to build the city to an enviable level.
Nigerians and even foreigners have often said that with the resources which God has bestowed on our country, Nigerians have no reasons to suffer in the midst of plenty. From the 60s to the 70s, Nigeria had what was termed then as oil boom but shortly after 1979, there was what economists called oil doom which came about as a result of the drop in the level of oil struck on Nigerian oil fields especially in the Niger Delta region.
As a result of this "oil doom" the Murtala-Obasanjo regime which later after Murtala Mohammed's death had General Olusegun Obasanjo (as he was then known) as Head of State introduced what he called austerity measures and urged Nigerians to "tighten your belts" as the nation's income from oil was dwindling. At that time the pump price of petrol (premium motor spirit) sold at less than 19k. But Obasanjo, as part of his austerity measures increased the prices to about 40k. Ever since that time, all eyes have been on oil as the most reliable and quick source of income. Government often resorts to increase in the price of petroleum products as a veritable source of fast income to executive government projects and in the process, a large chunk of the proceeds from such oil price increase had often ended in private pockets or private bank accounts in Nigeria and abroad. From the governments of Alhaji Shehu Shagari to that of Ibrahim Babangida, prices of petroleum products were increased marginally but with very little attention paid to the maintenance of the four refineries in the country. The four refineries are:
Old Port-Harcourt Refinery: Built and commissioned in 1965, it currently has the capacity to process 60,000 barrels of crude oil per day. This refinery in technical parlance is a bydroskimming refinery.
New Port-Harcourt Refinery: This is a complex conversion refinery, the most modern in the country. It was commissioned in 1980 to process 150,000 barrel of crude oil per day.
Warri Refinery: This refinery currently has a name plate capacity of 125,000 bpd of crude oil. It was commissioned in 1978 as a 100,000 bpd refinery of moderate complexity. The bottleneck was removed in 1982 to its present capacity of 125,000 bpsd.
Kaduna Refinery: The Kaduna refinery consists of two 50,000 bpd crude distillation units, one of which is designed to process both domestic crude and imported crude used for the production of Lube oil. The combined name plate capacity of Kaduna refinery is 100,000 bpd.
According to a report released by Transparency International on Nigeria refineries, the four refineries built over a period of almost 25 years (from 1965 to 1989) have a combined capacity for processing 445,000 barrels of oil per day, to produce two-thirds of the fuel needed by Nigeria daily which is 20 million litres of fuel. However, the facilities have been working below capacity for most of the time, and have even been shut down on several occasions because they are not properly maintained. The refineries began to rot during military rule when an overhaul of the refineries which analysts refer to as 'Turn-Around Maintenance' (TAM) which should have been done every two years were left undone for five years. When eventually the Turn-Around Maintenance (TAM) was carried out with billions of Naira, the repairs were not properly supervised. The Obasanjo-led administration has also tried to solve the problem that bedevilled our refineries to no avail.
These refineries are presently faced with a myriad of problems due to lack of Turn-Around Maintenance that they hardly produce up to 20 per cent of domestic fuel demand. The combined total capacity of domestic production of these refineries was first 30 per cent in 2000. Importation of about 70 per cent of domestic fuel demand was embarked upon. As at today, the domestic requirement for fuel is wholly imported and this situation has given rise to the constant increase in the prices of petroleum product because of government's decision to totally deregulate the downstream sector of the petroleum industry. But up till now no government official has been able to account for the proceeds of the daily crude oil allocated for refining for local consumption.
Before now, petrol refining was one of the three downstream segments of the petroleum industry in Nigeria and it was exclusively controlled by the government through the Nigerian National Petroleum Corporation (NNPC). Distribution is the other segment but part of the distribution network - trucks is already in the private sector. As a result of government's decision to deregulate the downstream petroleum sector, the importation of petroleum products has become the order of the day. While the independent and private marketers make huge money and smile to the banks daily, Nigerians are daily groaning in anguish and pain of the effects of the increase in the price of petroleum products, while government is not giving a thought to incessant demand to make the four refineries in the country functional.
The continuous upward price adjustment in petroleum products should therefore be examined through the participation of the citizens as the policy-makers too are citizens who are in leadership positions. They may wish that the masses enjoy the benefits of existence. Unfortunately they are too weak to tread the hard road to success. So far this regime has increased pump price of petroleum about seven times. But the solution does not lie in increasing the prices of petroleum products.
Firstly, citizens in the position of power should ensure that our refineries are fully functional. Both the elected and career professionals should be able to speak up to the electorate why we should continue to import refined petroleum product when with our excess budgeting we could repair and build more, to also accommodate export in form of value added. This should be the struggle of the Nigerian masses. With all the refineries in full gear and more private ones built to accommodate the upsurge in demand, employment opportunities will be open to more able-bodied Nigerians. The benefit of this singular step would stabilise the national economy reasonably.
Secondly, the political and career professional class are guilty of underrating the strength of the masses. The people of the Niger Delta where the oil comes from are neglected by the Federal Government to the extent that most of them have resorted to illegal bunkering, vandalising oil pipelines, and other activities. If the authorities wish to continue to prospect from that region, their conditions must be improved upon so that they can become more security-friendly. The escalating crises and the rebellion led by Asari Dokubo of the Niger Delta Peoples Volunteer Force (NDPVF) said to be 1.5 million man strong has caused the recent over-price of crude oil in the international oil market.
Again, this is to be blamed on the citizens who are virtually sleeping or too passive to know how they are being ruled. The civil society organisations and the Non-Governmental Organisation (NGO) are too busy agitating for rights as opposed to their own and the citizens responsibilities. Our demand should not only be on reduction of prices of petroleum products alone but also that the nation's refineries should be made functional to refine crude for national use and export or reserve. The present regime of refined petroleum product importation amounts to burning one candle at both ends and more. Crude oil is transported to foreign refineries in little countries like Gambia, Libya etc for processing, they are transported back as refined products for the consumption of Nigerians.
In this case, transportation to and fro is a colossal waste while we provide employment for the foreign nationals where the refineries are situated; in addition we pay wages to our own idle oil workers; in the existing four major refineries which are now turning to white elephant projects. All the above makes for continuous upward adjustment of the pump price of petroleum products. The citizens should rise in unison to demand that the refineries should be made functional and additional ones built. The people of the Niger Delta should be adequately taken care of to check sabotage as the losses incurred on pipeline vandalisation are equally capable of raising the pump price of petroleum products. The security agencies should perform their duties as good citizens by eradicating illegal bunkering which has resulted in the loss of huge revenue in the past.
The citizens in addition should demand that a Minister of Petroleum with full responsibility to manage the nation's oil prospecting refining and marketing should be appointed. It is sad that this constitutional provision sworn to by our politicians is being flouted for over five years.
- Balogun and Mohammed are President and Deputy President of the African Citizens Parliament, respectively
