Future of NNPC refineries By Jide Osuntokun

The management of NNPC, the Nigeria-owned oil company issued a statement recently that it had decided to give to third parties the management of their refineries in port Harcourt, Warri and Kaduna after the completion of their turn around rehabilitation rather than run the refineries themselves.

I must confess that I see their decision a bit late and out of tune with best practice anywhere in the world. In 2007 and towards the end of his second administration, President Olusegun Obasanjo decided to sell the refineries to business men with demonstrated capacity to run businesses.

I believe Aliko Dangote was one of those who invited to buy two of the refineries then. The reasoning behind the decision to sell the refineries was that annual or periodic servicing of the refineries had become a drainpipe to national treasury and a source of corruption of unearned income for people connected to those in power.

Selling them was also in consonance with Obasanjo’s embrace of market economics championed by his friends in the West who justly felt state intervention in economic development in the Third World has not really paid off.

From our history, we ourselves came to realize that “government business was no one’s business”. Public corporations merely provided jobs for the boys and gave leaders the easiest way of avoiding deep thinking of how to solve unemployment problems in post-colonial Africa.

But after 60 years of independence, we should, if we are not mentally retarded, be able to think properly and do the right things to advance the development of our country .

Unfortunately the sale of the refineries was canceled by Obasanjo’s successor Umar Yar’Adua apparently under the influence of his radical group from Ahmadu Bello University who wanted the new president to cut his umbilical cord with the man who made him president.

One of the reasons for our underdevelopment in this country is the fact that we do not manage our resources well.

There is no reason why a country that has earned trillions of dollars from hydrocarbons and agricultural products since independence should be vegetating at this level of underdevelopment.

The way we manage our affairs is a magnet for corrupt nationals of other countries who come to our country to join our corrupt countrymen in the frequent feeding frenzy on our national resources which should have been judiciously invested in the development of our country.

We all see people from the Asian continent for example who come to our country with nothing but the shirts on their backs, use our banks to raise capital which they use to enter into so-called joint ventures with powerfully connected people to access preferred areas of our economy with privileged information to make cheap money without any hard labour.

When the late Professor Tam David-West was alive, he advised that these refineries should be sold because they had become bad investment.

I had written on this platform several times supporting those who advocated the sale of these refineries on the grounds that the money being wasted on their servicing could have been used to build new ones.

I even wrote that the refineries be given gratis to the companies that built them on the proviso that they put them back to production. If done we would not have spent close to N10 trillion importing refined petroleum products in the last 10 years and perhaps the new owners of the companies would have not only been paying taxes to the various governments of Nigeria, they would also have been earning hard currencies for the country from export of some of their products.

It is too late in the day to be spending billions of naira on so called turnaround of the refineries when they could easily be disposed off as they are. Setting up another outfit to supervise their management in joint operation with a third party is going to a dead end which does not make sense. I pray that our rulers will realize that they are not ruling over fools who can be fooled all the time.

It is a pity that our representatives in parliament do not carry out their oversight duties properly. If they do, they should have posed the right questions to the executive and try to stop this unwise and uneconomic venture of the NNPC.

We just do not have the time to be fooling around at the time when the usefulness of the oil industry is time bound in a world moving inexorably towards non carbon source of energy.

The concern for the abused environment and what that poses for the survival of the human race will, whether we like it or not, force the world to abandon the use of hydrocarbons in the foreseeable future.

Whatever money that can be made from our country’s hydrocarbons resources now should therefore be judiciously and wisely utilized. Gone should be the days when money from oil and gas is distributed as handouts to political hangers on.

The ongoing coronavirus has exposed our country’s political leadership to the growing anger of the youth who deprecate our absolute state of unpreparedness. There are no modern hospitals. Equipment necessary for modern hospitals are not present in the few hospitals that we have.

Electricity without which a modern health system can’t work is unavailable and most of our hospital staff are inadequately and poorly trained due no fault of theirs. The staff we have are poorly remunerated leading to mass migration of hospital staff abroad where they are not only well paid but better equipped to face the challenge of practicing medicine in the 21st century.

Good health system like the British National Health Service (NHS) requires adequate and proper funding and that is why the kind of wastes and unreasonable government practices in Nigeria will not be tolerated in other countries and we should henceforth not tolerate it in Nigeria.

This is why the so-called farming out the running of refineries to third parties in Nigeria must be stopped. The contracts for the turnaround of the refineries must be cancelled and replaced by outright sale or giving out the refineries free of charge to those who built them with the condition that they make them work.

The benefit immediately to Nigeria is the husbanding of our resources and saving the yearly one trillion naira that would have gone into refined petroleum importation which is in itself marred with corruption as well as the millions of dollars for turnaround servicing of the dollar guzzling refineries.

This present government cannot be talking about blocking the loopholes in government spending while tolerating the shenanigans going on in the NNPC.

Business cannot continue and must not continue as before if and when we survive the coronavirus which has exposed our soft underbelly of absolute unpreparedness. The work of government needs to be taken more seriously as from this time on.

Our people have become very sensitive to maladministration at every level of government. The present stimulus package as palliative for the hardship caused by the coronavirus is being mismanaged. Food and other materials including money that were promised our people are being poorly distributed to the discomfort and discomfiture of the people.

Even though some of the people know that government lockdown imposed on them is for their long-term interest, many are saying that they may be killed by hunger before coronavirus catches up with them. It just cannot be business as usual.

Nobody must be allowed to make money out of the misery of our people. Not even at a time when the coronavirus has become a leveller not knowing the rich from the poor. In any case what does the rich do with money nowadays when one cannot access the money in the shut banks or ride fancy and expensive cars on closed roads.

We are in a new world! Everybody should be better prepared to face this new world with new attitude and commitment to work both as individuals and as government.

It is in this light that I appeal for frugality, deployment of government resources to where they are most needed and cutting off unnecessary fat. Economics is not neuro-science, rather it is common sense science.

No individual would run his personal business the way we have been running the oil industry since Oloibiri in 1956. Is it any wonder that since 1956, the NNPC cannot on its own without joint venture partners explore and exploit for crude petroleum or gas?

It has remained a sleeper partner collecting rents and commissions and selling oil that it does not produce while paying humongous salaries and allowances to its over bloated staff opaquely recruited with no public oversight.


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