BY: IFEANYI IZEZE
The report that Nigeria earned $54.5bn from crude oil and spent $54.6bn
to import petroleum products in 2018 should be a saddening narrative to
anyone who still has an iota of patriotic attachment to this country.
When you hear things like this about this country you get vexed in your
spirit. How do you explain this?
Surprisingly, the nation’s apex oil concern, the Nigerian National
Petroleum Corporation (NNPC) is yet to wake up its ideas to agree that
it has completely lost it not because it has no well-trained and fully
qualified professionals who are capable of producing results but because
for whatever reasons, its top managers willingly allowed politicians and
influence peddlers to completely mess up with the NNPC core mandates.
Now is more fashionable for even the refineries and PPMC staff to
support importation of petroleum products than to carry placards in
protest against the sorry state of the nation’s refining plants where
they work. Who do us this?
Let’s leave the politicians in government out of this, and ask: are
the refineries staffs concerned at all about how the ordinary Nigerians
perceive them as they go to work every day to produce nothing and at the
end of every month get paid huge sums of monies as salaries for doing
nothing? Until we begin to think differently, nothing will ever change
in this country.
As disclosed by the Organization of Petroleum Exporting Countries (OPEC)
in its Annual Statistics Bulletin (ASB) 2019, the value of exports of
crude oil by the country in 2018 amounted to $54.513 billion while
import of petroleum products was $54.645 billion. So that means Nigeria
did not gain as such from its entire oil business last year, as its
value of imports was higher than its value of export.
Is it not a clear aberration that this country does not refine its crude
oil, rather spends huge monies on importation of petroleum products for
its over 200 million inhabitants? Nigeria spent N2.582 trillion on fuel
importation in nine months, from January to September 2018, rising by
12.9 percent from N2.289 trillion recorded in the first three quarters
How much will it take to install new plants at the same site in Port
Harcourt, Warri and Kaduna where the NNPC refineries are currently
located? If we cannot revamp what we have as refineries, why can’t we
build new ones?
Data from the National Bureau of Statistics (NBS) Foreign Trade
Statistics for the Third Quarter of 2018, has it that Nigeria’s fuel
import stood at N845.12 billion, N720.4 billion for the first and second
quarters of 2018 respectively.
During the crude oil price crash, which started in 2015, the country’s
value of exports dropped to $41.168 billion, and got worse in 2016 as
the country made a meagre $27.295 billion.
On the other hand, the country’s value of imports of products in 2014
was $70.778 billion, dropped to $52.525 billion in 2015; $46.552 billion
in 2016; $49.508 billion in 2017, and shooting upwards to $56.645
billion in 2018.
Despite the fire and brimstone spat on revamping the nation’s dead
refining plants by President Mohammadu Buhari when he took over power in
2015, it’s yet to be seen what he as the petroleum minister has done
to turn around the pathetic state of the refineries. Rather than the
fortunes of the refineries taking a turn for good, it has in real terms
worsened since he assumed office on May 29, 2015.
The refineries lost N34.57bn from June to December 2015; N8.64bn in 2016
(data for January to August showed); N47.19bn in 2017, and N132.51bn in
2018, according to the Nigerian National Petroleum Corporation.
These are NNPC data: In 2015, Port Harcourt, Kaduna and Warri refineries
were idle for eight months, seven months and nine months, respectively,
losing N10.05bn, N36.03bn and N21.39bn.
Warri refinery was idle for five months in 2016; KRPC did not refine
crude for six months, and PHRC was only idle in September.
In 2017, Kaduna, Warri and Port Harcourt refineries were idle for six,
five and two months, respectively, losing N32.61bn, N22.14bn and
Kaduna refinery did not process crude oil for 11 months in 2018, while
Port Harcourt and Warri were idle for seven and three months
respectively, losing N31bn, N59.96bn and N41.71bn.
Latest data from the corporation show that, Kaduna and Port Harcourt
refineries remained idle throughout the first quarter of this year and
it is even suspected to still be idle till now. How long can we continue
like this as a country?
We all know that the combined installed capacity of all NNPC-own
refineries amounts to 445,000barrels per stream day but very few of us
can say when, if ever, the refineries produced at optimal capacity of
even as low as 30 percent cumulative performance. So it should not be
surprising that the plants are recording huge loses simply because such
low rates tend to result in losses.
Though NNPC said in its financial and operations report for September
2019, that “the refining companies have reported operating losses for
four of the past 12 months,” we know it was an understatement packaged
to deceive both the federal government and the Nigerian public. How can
plants that never ran up to 30 percent cumulative capacity utilisation
be talking of losses only for four out of the past 12 months?
These same sentiments have driven opposition against private-sector
involvement in modernizing the refineries despite copious evidence that
the many turn-around maintenance efforts in the past did not add much
value, even if there were resources to do one now, the outcome is not
going to be very different
Truth be told, NNPC as currently packaged with its culture of corruption
and inefficiency cannot make any improvement on the conditions of the
existing nameplate refineries. The plants should have been sold a long
time ago. They will continue to depreciate and lose value for every day
NNPC still keeps them. Money spent on TAMs in the past was a total
waste. Any more TAMs proposed will be throwing good money down the drain
or more aptly into the pockets of a few rogues in government and NNPC.
The only way those refineries can work optimally is to completely stop
all forms of fuel import and the attendant subsidy payments. But will
the government do it? The answer is No and reason being the lack of
political will power to be honest in service of this nation. It may be
difficult for the country to cope for some weeks or maybe months but
that’s the only way to get NNPC to garner enough willpower to be
honest and serious in bringing the three refineries in Port Harcourt,
Warri and, Kaduna to work optimally and produce products for our
domestic consumption. As long as the subsidy programme keeps running,
none of the refineries will ever work as the interest groups will ever
make sure they don’t.
It was in 2016 that I warned in one of my analysis that “When 2019
comes, the cost of economic mistakes often made out of sentiments and
ignorance will stare many Nigerians in the face. Although sentiments
also sometimes rob people of the sense of guilt, many will remember how
much the country bled during seasons of subsidizing importation of
petroleum products to ensure availability and affordability, while the
refineries remained epileptic at best and at worst totally dead. We can
be better than this as a nation of people. God bless Nigeria!
(IFEANYI IZEZE WRITES FROM ABUJA: IIZEZE@YAHOO.COM; 234-8033043009)