The controversy surrounding the plan to
remove oil subsidy has continued to gain
ground, particularly among the governors.
The myopic thought of some of governors
is that, only the removal of the oil subsidy
could bring more revenue for them from
the Federation Account, as a saving grace
to bail them out of the increasing overhead
burden brought about by the new
minimum wage. To them, the N18,000
minimum wage cannot be paid unless their
share of the national cake is substantially
increased through removal of oil subsidy.
It is therefore an economic blunder for any
government in Nigeria of today, to remove
the so-called subsidy on petroleum
products. This is not the best of time to
think in that way. Such resolve would only
lead Nigeria to economic suicide, which
would neither favour all levels of
governments, the private sector, which
clamours for subsidy removal, or the
common man, who is bound to bear the
burden for the following reasons:-
1. Prices of goods produced in the country
would automatically increase.
2. Transportation fares would sky rocket to
the extent that the common man would be
forced to make most of his trips around his
vicinity on foot.
3. Health care delivery would also be
affected adversely since the common man
may find it difficult to raise money to treat
himself.
4. The notion that the money accruing from
subsidy removal would be used to provide
infrastructure to accelerate economic
development would be a mirage.
5. It is the common man, whose interest,
the government is claiming to protect that
would suffer most.
6. In the final analysis, the federal
government would realise that removal of
oil subsidy would be counter-productive as
it would not be the best option to improve
our economy.
The best panacea to all our petroleum
problems is the provision of indigenous
mini-refineries.
It is unfortunate that the main issue that
has occupied the Federal Government’s
agenda since the era of Obasanjo, is the so-
called removal of subsidy from petroleum
products. Nigerians expected Obasanjo
Government, since May 29, 2003 to have
brought economic succour and prosperity
to them. In his second coming, three square
meals were expected to be on the table of
Nigerians, employment opportunities for
the jobless, integration and development of
rural areas, and make life more abundant
for all-apology to the great sage, Oyeniyi
Obafemi Awolowo. But these expectations
were dashed. After he took over the
mantle of leadership on May 29, 1999, he
increased the pump price of petroleum
products eleven times throughout his 8-
year tenure, leading to nationwide strike
on six occasions. This means that
something is wrong somewhere,
particularly when Nigeria could not produce
adequate refined petroleum products for
domestic consumption. It had to resort to
heavy dependence on importation of the
products. The idea of mini-refinery was first
mooted some years ago to complement
the output of bigger refineries in the
country, but was quickly swept under the
carpet by the president because it would
obstruct importation of petroleum products,
thereby putting some cronies of the
government, who imported the products
out of their lucrative business. So, the
selfish interest of certain individuals in
government was allowed to prevail over
national interest.
That is why this cartel makes sure our
refineries are not maintained properly so
that they could continue to import
petroleum products permanently for their
own gains. When government talks of
removing subsidy from petroleum
products, is it not to shore up the gains of
this same cartel in charge of importation of
the petroleum products which we could
easily produce at home at cheaper price, if
the four refineries were made to function
at optimum capacity? The same cartel is
behind the illegal bunkering and smuggling,
which results in government losing more
than $3.5 billion every year according to
Central Bank Report.
PERMANENT SOLUTION TO REMOVAL OF OIL
SUBSIDY
The Federal Government has the solution
at its finger tips. It is not jacking up prices of
oil products every time, or mass
importation of the oil products, which has
turned to be a soft landing pad for
emergency millionaires, as being done at
present, it is not by removing the so-called
subsidy in order to have what our
president called “marginal gain”. But by re-
ordering our system of local production of
the petroleum products. In doing this, we
have to be in-ward looking. It should be by
establishing mini-refineries in the 6 geo-
political zones of the country to start with,
preferably near cement manufacturing
centres, which will make use of most of
the by-products of the petroleum products.
Nigeria has the manpower with adequate
technical know-how to design, construct,
fabricate and construct mini-refineries. The
little inputs from the foreign experts can be
readily made available by Malaysia,
Indonesia, India or any other developing
country that depends mainly on mini-
refineries for the energy supply of their
domestic needs. Malaysia alone has about
28 mini-refineries as at 2000 to provide for
the required energy supply for
transportation and manufacturing
industries. Most of the developing countries
don’t depend solely on the type of gigantic
refineries that we have in Nigeria and
which are difficult to maintain. They have
failed to provide adequate premium gas
for our domestic needs because of lack of
effective turn around maintenance (TAM).
It is a tragedy that for the better part of
our existence as an independent nation,
particularly since the military rule of
Ibrahim Babangida, Nigerians have been
facing one form of fuel scarcity or the
other. The situation refuses to abate.
Instead, it continues to linger due to poor
maintenance of the four refineries.
In the words of Larry King, “Nigerians
import what they have and export what
they don’t have.” What a parody!
Nigeria can solve this problem, which has
become seemingly intractable. During the
military era, the junta preferred to import
fuel for local consumption in order that
their immediate families and cronies could
largely benefit. Therefore, they preferred
importation to the maintenance of these
refineries. When the civilians took over,
they continued to import the needed
premium gas as temporary measure,
thinking that, as soon as the ‘Turn-Around
Maintenance’ (TAM) of the refineries was
carried out, importation of the petroleum
products would stop. But this was not to be.
Two weeks after the TAM was carried out
on Kaduna refinery, it was gutted by a
mysterious fire, the cause of which has not
been discovered up till today. Because of
one problem or the other, the four
refineries could not be adequately
maintained. The civilian government of
Obasanjo and Umaru Yar’Adua has no
alternative but to continue to import.
WHY THE REFINERIES COULD NOT BE
MAINTAINED
The terms on maintenance were not
sufficient enough to keep the refineries in
good shape for a longer period before
breaking down.
Whenever the TAM is to be carried out
periodically, foreign experts are brought
into the country but they have to wait
endlessly to do the work, whereas our local
experts in this field have not been
adequately trained to effectively take
over the TAM from the foreign experts
who installed the refineries.
It follows that there should have been local
workshops where the needed spare parts
for TAM should be fabricated and
manufactured, instead of waiting endlessly
for the arrival of such imported
components for repairs. Such workshop
would have provided more jobs for our
jobless technicians and engineers in that
field;
The authorities of these refineries have
failed to make use of certain government
parastatals, such as: Scientific Equipment
Development Centre, Enugu which was
responsible for the fabrication and
production of some essential components
for the refinery in Port Harcourt in the past
and Engineering Material Development
Centre, Akure. These two Federal
Government parastatals, under the aegis of
National Agency for Science and
Engineering Infrastructure (NASENI), have
the capacity and technical know-how to
produce needed spare parts and
complementary expert support to
contribute to TAM of the refineries;
Whereas, if a good maintenance culture
had been put in place, it would have led to
massive job creation with small and
medium enterprises, springing up
everywhere, paving way for jobless youths
who are roaming aimlessly on our streets,
looking for jobs that are not there. Naira
will naturally appreciate in value. Our
external reserves are definitely going to
increase, leading to real stability and
increase in the value of our local currency,
which at present, is nothing to write home
about. If we were to consider the volume
of our trade in crude oil, high inflationary
trend will be checkmated and Nigerians will
have value for money in their hands.
NEED FOR ESTABLISHMENT OF INDIGENOUS
MINI-REFINERIES
The better alternative to importation of
petroleum products is to establish mini-
refineries all over the country. In October
2000, when the report of the special
committee on review of Petroleum
Products Supply and Distribution was
released, the opinion of NASENI was sought.
The Agency came up with very beautiful
recommendations, which we are sure the
Presidency has not seen up till now.
An aspect of that recommendation deals
with establishment of mini-refineries across
the length and breath of the country as the
best panacea to checkmate the incessant
fuel scarcity in the country.
SOLUTION THEREFORE IS INDIGENOUS MINI-
REFINERIES
Nigeria could escape the vicious cycle of
fuel scarcity and jacking up the prices of
petroleum products and there will be no
talk about the removal of the so-called fuel
subsidy. There is an urgent need to ensure
the internal development of delivery
system for oil refining and pipe line
technologies to be developed along side
the existing imported ones. It is therefore
recommended that:-
i. Government should adopt a policy of
home-grown development of refining of
crude oil and processing of petroleum
products and by-products;
ii. To this end, government should
commission the conceptualisation, design,
manufacture and installation and test-
running of a prototype mini-refinery within
a specified period of time, to be fully
funded and the right manpower deployed
to ensure its success;
iii. Government should ensure the
proliferation of mini-refineries across the
length and breath of the country, and
preferably around cement plant locations in
the first instance, which needs certain by-
products of petroleum in the manufacture
of cement, based on the developed
technology.
iv. In the mean time, government should
ensure that all future TAM contracts of the
nation’s refineries and pipeline must have a
clause which requires the foreign
contractors to establish workshops locally
for the manufacture of certain percentage
of the spare parts and components to be
used in the maintenance contract:
v. All these should be tied to the NASENI
mandate as part of its programmes
already approved by the government. We
assure the government that by the grace
of Jehovah, it will be able to actualise this
fit within 6 months of its existence through
NASENI, which has the capacity to source
for the needed manpower with the
required technical –know-how, both within
and outside its existing parastatals.
ADVANTAGES OF BUILDING MINI-REFINERIES
It is my candid belief that several
advantages will accrue to the country if
mini-refineries are established:
i. Refineries will be built at more affordable
cost because it is indigenous technology;
ii. The strategy will constitute a driving
force for the rapid development of all
aspects of engineering, science and
technology, locally in the petroleum sector;
iii. It will generate a large pool of
engineering design and manufacturing
industry in human resources in support of
oil refining and pipeline industry that will
emerge;
iv. A great number of these firms will be in
the small and medium enterprises cadre;
v. An indigenous capability in maintenance
will follow as a natural cause, with
workshops turning out spare-parts, locally
fabricated and manufactured, for
maintenance of the mini-refineries;
vi. Most of the inputs into the operations of
the mini-refineries will be obtained locally;
vii. Mini-refineries, suitably and strategically
located across the country, will develop
their own local captive markets which they
will serve more effectively, thus doing
away with the problems of long supply
lines and bridging issues;
viii. Prices of petroleum products will
drastically reduced; and industries using
petroleum products and energy to propel
their equipment will become more vibrant
and have capacity to produce up to their
maximum level because of cheap
petroleum products;
ix. In future, exportation of our crude oil
will be reviewed. Nigeria will prefer to
export more of the refined products
overseas, since its by-products will largely
serve our emerging industries as avenue
for attracting more foreign exchange
earnings, through exportation of such
capital goods.
Finally, such a strategy will help the Nigeria
Economy and enhance the welfare of the
citizens. In essence, it means that
establishing mini-refineries all over the
country, is synonymous with establishing
avenues for job creation.
Perhaps, if Mr. President, and Commander
in Chief of the Armed Forces, Ebele
Goodluck Jonathan, can accede to the
laudable project for the benefit of all today,
Nigeria can be a better place for us to live
tomorrow.
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