Publisher :DANIELS G.O
#Before NITEL Happens to Government Refineries#
A while back during the tenure of Dr. Ibe Kachikwu, as Minister of State Petroleum, there was this proposal to get private sector to partner in refurbishing the Port Harcourt Refinery.
As usual the National Assembly invited the Minister and GMD Oando for trying to sell and acquire our national assets.
A little over a year ago, I was with the MD of Port Harcourt Refinery, he told us that the President insisted on original builders of the refinery to do the turnaround.
The GMD NNPC, Mr Mele Kolo Kyari, came up recently with a position that the government will not put in any money into the Refineries, instead they will seek a PPP arrangement.
This has started as companies have been invited on a Build Operate and Transfer of NNPC Pipelines on a 25year arrangement. Operators are to make their money back by a throughput arrangement. If this happens, a lot of the existing NNPC depots will become operational and transporting petroleum products by roads will be only through short distances as NNPC Depots are scattered round the country and connected by pipelines.
More recently during the peak of the Covid 19 Pandemic Nigeria made a commitment to international donors to deregulate, remove subsidy and work towards unifying our multiple exchange rates this is to ensure money is freed up for development, make our economy attractive for investment, encourage diversification and our ability to repay the loans.
While trying to do this, Crude Oil prices started to rise with lots of positives in the area of reducing our budget deficit.
On the flip side, imported petroleum products started to rise.
What is government expected to do?
Increase prices in line with the commitments made or allow subsidy return?
PIB is still in the National Assembly, with passage expected before half year.
Now labour says you can’t increase fuel until the Refineries are fixed.
Could this be the reason for approving the $1.5b TAM?
My take is labour should concentrate on ensuring minimum wage is paid and protect employees from exploitation.
Tomatoes in Kaduna even at the peak of harvest is not same price with Lagos because of the transport element.
Why then is Petrol same price as Lagos and Kaduna with government paying the differential?
Whatever government has to do with the Refineries should be done fast. Once Dangote Refineries starts production, *_Nitel_* will be the fate of NNPC owned refineries.
Let me share a very open secrete, our Modular Refineries now produce most of the Low Pour Fuel Oil that powers our Cement factories. Good news you think?
Well the product is sold in dollars to offtakers, who then sell in naira. So while Refining locally will create employment it will not necessarily result in cheaper products if crude is sold in US dollars and determined by international oil prices.
But this is the good news, the CBN Governor says Dangote will sell fuel in naira.
Whatever value we intend to extract from our refining should be immediate as Renewable Energy is here. Solar Powered electric vehicles are coming.
Writes from Kaduna