By Comrade Gbenga Olowoyo
“Great leaders are willing to sacrifice the numbers to save the people. Poor leaders sacrifice the people to save the numbers.”
-Anonymous
The re- occurrence of fuel Subsidy removal and retainer in the socio economic life of Nigeria as a country and Nigerians as people has gone beyond ordinary because it has become a dreadful word to many homes creating psychological destabilization.
The hype attached to the fuel Subsidy since 1970s till date has become a phenomenon, provoking many socio economic issues, brewing suspicion and mistrust between government and the Nigerian people.
The fuel Subsidy was first removed in Nigeria in late 1970s, since then , there have been uneasy calm in Oil and gas sector, especially in the way and manner the premium motor spirit ( PMS) is being touted and colourated with subsidy payment and removal, being the highest consumed commodity in Nigeria by all strata in the country.
Nigeria Government that had gone ahead abinitio to secure $800 million loan from world Bank, which is termed as relief funds, ahead of fuel Subsidy removal is an indication that our leaders are agents of modern day colonialism. In a situation whereby Federal Government of
Nigeria prefers to spend not less than $850 million each month (about N40,1 billion daily and N1.24 trillion monthly) on fuel Subsidies according to the Nigerian National petroleum company limited, it is a sad situation.
The general gospel behind the Oil Subsidy removal is to use it as a form of intervention to reduce the cost of fuel by providing direct financial support to oil companies but the reverse is the case in Nigeria because endemic corruption and saboteurs in the oil and gas sector have taken over the good mindset of some stakeholders in the sector ( if there is any good mindset at all).
How do you explain he whooping sum of 3.3 trillion Naira ($7.3 billion) Us dollar that was proposed by the Federal Government government, to spend on fuel Subsidies until mid 2023. Honestly, l hope Nigerians both Leaders and the led are sane enough to ask questions?
At the last estimate, the Federal Government subsidises gasoline to the tune of USD 3.9 billion, almost double the entire health sector budget.
The make-believe by government on subsidy payment is that Subsidies exist because the government fixes the price of gasoline for consumers below the international price and uses government resources to pay for the difference which was first introduced in Nigeria in the 1970s as a response to the oil price shock in 1973.
Also, this was further institutionalised by the President Obasanjo administration in the year 2000 as the economic mainstay of his administration, thereafter, successive Governments had borrowed a leaf from his Administration .
Presently,the sum of N1.24 Trillion Naira is spent monthly on fuel subsidy payment by the outgoing President Mohammodu Buhari Government in Nigeria and Federal Government is comfortable with the abracadabra arrangements while Nigerians are docile with monthly payment either through borrowing to offset the payment or with part of our monthly IGR from FIRS or Nigeria custom Services (NCS).
Inspite of numerous, attempt spearheaded by Federal Government at reforming oil and gas sector, Nigeria has never successfully removed gasoline subsidies, in large part, due to strong popular opposition to the reform which economic experts had the believe, is to satisfy the few elite in the society and strip off Nigeria of the common wealth
From the time immemorial, Federal Government had tried to justify removal of subsidy payments with rationalized reasons but the basis for such defense is always faulted by Nigerian masses.
The claim that subsidies come at great cost can not be controverted , as presented by voodoo economic management team of Federal Republic of Nigeria:
the vast majority of the subsidy was expected to better off Nigerians but few people who engaged in fuel importation are feeding fat on the Nigeria resources;
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The enlightened sizeable number of Nigerians will oppose the removal of subsidies which is described as non existent.
Non functioning of Refineries in Nigeria the myth and mystical
It is very cogent and expedient to beam our search light on the non functioning of Refineries in Nigeria and what is responsible for it, that successive government in Nigeria, can conviniently borrow money to build rail transportation , import fuel, pay humongous fuel Subsidy at N1,24 Trillion per month and choose to close its eyes on the need to reactivate our moribund refineries or build new ones in order to reorder the economic well being of Nigeria as a country
It is on record that former Head of state General Yakubu Gowon built Port Harcourt, Warri and Kaduna Refineries between 1966-1975 to provide for domestic consumption
Let us refresh our memory on the history of refineries in Nigeria , there are four major existing refineries in Nigeria they are listed below as follows:
Old Port Harcourt Refinery; capacity 60,000 bpsd commissioned in 1965.
Warri Refining and Petrochemical Company; capacity 125,000 bpsd commissioned in 1978.
Kaduna Refining and Petrochemical Company; capacity 110,000 bpsd commissioned in 1980.
New Port Harcourt Refinery; capacity 150,000 bpsd commissioned in 1989.
Thus, the total installed capacity is 445,000 bpsd. These plants in the last 15–20 years had a poor operating record with average capacity utilization hovering between 15 and 25% per annum. As a result, 70–80% of the national petroleum products demand is met through import. As at February 2023 the aggregate demand of petroleum products in Nigeria was equivalent to 750,000 bpsd. Hence, there is ample scope for investment in new plants and revamp of the existing ones to make them more efficient.
Available records showed that the history of Nigerian refining; The Nigeria Petroleum Refining Company (NPRC)
Exploration for crude oil commenced in Nigeria in 1937 when Shell D’Arcy was granted the sole concessionary rights over the whole territory of the country [Nigerian National Petroleum Corporation (NNPC)
It is on record that Crude Oil was first discovered in commercial quantity in Oloibiri in present-day Bayelsa State in 1956 when Shell D’Arcy drilled the first successful well. That same year, Shell D’Arcy changed its name to Shell-BP Petroleum Development Company of Nigeria Limited. It continued development activities in 1957 and the first shipment of crude oil from Nigeria took place in 1958
This acquisition occurred just a year after the formation of the Nigerian National Petroleum Corporation (NNPC) in 1977. The NNPC was created as a merger of the Nigerian National Oil Corporation (NNOC) and the Ministry of Petroleum, and was manned mainly by professionals who were recruited from the private sector International Oil Companies (IOCs) to grow capability for Nigeria to be an active player in the fast developing Oil Industry in Nigeria.
Honestly, if our refineries have been working to the fullest ; Nigeria refineries would have been producing five types of products in surplus to full benefits and economic prosperity of Nigerians, namely:
*LPG (liquefied petroleum gas or cooking gas).
*PMS (premium motor spirit) or petrol.
*DPK (dual purpose kerosene). Which now sells at N1, 400 per litre
*AGO (automotive gas oil) or diesel.
Conventional best practices is that a Refinery is designed and built to produce defined quantities and specifications (quality) of each of these products operating in a continuous manner without interruption for 24–36 months based on proper maintenance culture, before it is systematically shut down for a period, to carry out Turn around maintenance (TAM). When TAM is unduly delayed , performance of the refinery declines.
Non-performance of TAM has resulted in average capacity utilization declining to 20–25% . A more serious consequence is that the country is forced to resort to importation of petroleum products, and massive waste of scarce foreign exchange which is the bane of Nigeria today in Oil and gas sector as well as our economy generally.
The present day Nigeria Democratic government has shown that importation of fuel into Nigeria for our consumption is preferable to reactivating our refineries.
It is on record, however, that since the beginning of democracy in Nigeria I.e 1999 till date, no civilian government has ever budgeted a dime to build new Refineries and Nigeria Government has spent over 20 Trillion Naira on fuel Subsidy in 15 years; this humongous amount is even more than enough to build refineries in Nigeria.
Nigerians have begin to suspect that something mystical is responsible for our leaders to think that importation of fuel for the consumption of millions of Nigeria, and Federal Government is commiting Trillions of Naira to import, Is preferable than to build refineries. What a country?
Agenda before the New Democratic government in Nigeria come May 29th , 2023
To get out of the present predicament and hopelessness the incoming Government in Nigeria should begin to think outside the box and make Nigerians live as normal human beings
The underlisted aggregate suggestions that had been scientifically proven with empirical projections inclined with research findings are hereby reproduced below and should be critically and quickly considered in order to prevent civil unrest that may erupt if Subsidy removal is implemented:
*The existing refineries should be rehabilitated and brought back into operation to at least 80–90% capacity utilization. This is actually a least cost option compared with building Greenfield refineries of equivalent capacities. This can be achieved either through a private sector led financing and rehabilitation initiative as is currently being pursued by NNPC, or through outright divestment of majority equity shareholding to the private sector from the current 100% ownership by Govt.
*The refineries should be managed on a fully commercial governance structure in which decision making should rest with the Board of Governors of the Plants, with full control of their funds.
*The refineries should market their products directly to off-takers, so as to recover maximum value.
*For the above to succeed, the downstream sector should be freed from government control. Full deregulation will make it attractive for private investors to build refineries to target meeting Nigeria’s needs and also that of West and Central Africa. This will also create jobs and grow GDP.
*Government should create an enabling environment with fiscal incentives to attract investments into refining in Nigeria and make this happen.
Those interested in going into modular refining should carry out feasibility studies and understand access to crude oil feedstock from upstream companies.
In the same vein, Modular refineries should be treated as business ventures, not social services.
Nigerians are not interested whether Federal Government has suspended the removal of fuel subsidy or not, the front and backward Federal Government position is inconsequential to the Nigerian Masses , the interest of Nigerians is to live a normal life devoid of intimidation, insecurity, hopelessness, subjugation, exploitation and economic life imprisonment.
The expectation of Nigerans is that the yoke and jinx of non functioning of Refineries should be broken and become a thing of the past and equally build new Refineries.
It is an open secret that if fuel subsidy is removed today the fuel price will increase, hence, prices of goods and services will be out of reach of the Masses of this country and it will provoke spontaneous social unrest and unprecedented protest across the country.
If Dangote as an individual investor can choose to establish a 650,000 bpd single-train Crude Private refinery in Nigeria , hence, Federal Government of Nigeria can do more than this, which will not jeopardize the interest of the elites in having the sustainable access to Oil rigs as patronage template and platform to the elites in Nigeria as being practiced among the political class in Nigeria.
The projection that Nigeria could become Africa biggest Oil refiner by 2025 can not be achieved based on paper work but by walking the talk.
The report by Hawailti, a Pan- African investment research firm, affirmed that “both opening of the Dangote refinery and the rehabilitation of state owned refineries have the potential to make Nigeria , Africa biggest refining hub by 2025”
The incoming civilian government , as from May 29th 2023 , should focus vigorously on Oil market driven by Private Oil producers , risk takers and developers who are building modular refineries in oilfields in the Niger Delta , which Nigerian Government had regarded as illegal rather , their actions should be legalized while Federal Government should partner with them to get our country economy out of the present horrible predicament.
What is the present Nigeria comparative advantage , is it fuel importation? Let us think deeply
Nigeria Government should not put Nigerian Masses to economic death sentence with fuel subsidy removal abracadabra.
Enough is enough!!!
Comrade Gbenga Olowoyo fcia fipma JP is a
Trade Unionist and industrial relations practitioner gbengaolowoyo3@gmail.com
08033570338