Refineries As Sinkholes, Made Worse By Being An Albatross Round Nigeria’s Neck lf Loans Are Obtained To Repair Them

The Oasis Reporters

April 9, 2021

Edo Modular Refinery project, which was 95 per cent (mechanical works) completed in Ologbo, Ikpoba Okha Local Government Area of Edo State as at 2020.

By Chris Adetayo

Until the mid 1990s, Nigeria did not import refined petroleum products. The 4 refineries – 2 in PH, one in Warri and another one in Kaduna – were more than enough to meet most if not all the nation’s needs.

Furthermore, most State Capitals had Fuel Depots which were well connected, through a network of underground pipes, to these refineries. The logistics of getting refined fuel from refineries to end users was therefore relatively seamless.

Then June 12 happened. IBB stepped aside so his side-kick could take over. Abacha did and wielded power against the wishes of the people. All entreaties for him to go failed.

To compel him, a national strike was called. A powerful combination of Labour and Civil Society. Chief amongst the Labour bodies were PENGASSAN and NUPENG – the 2 Labour unions for workers in the oil industry. They shut down the country. Refineries had no one to operate them. Fuel stations had nothing to sell. Everyone was grounded for weeks. Nigeria was literally out of gas and gasping for breath.

What did Abacha do? Rather than give in to the demands of the protesters, he proscribed the unions. As Labour leaders went underground and their followers remained adamant, Abacha ordered the importation of refined products. Shipload of petrol and other refined products were moved in to get the country back on its feet. In addition, 100s of fuel tankers were also shipped in to move the fuel from the ports to the hinterland. The fuel tankers partly account for the collapse of many roads in the country arising from the weight of carrying fuel through roads that were never intended to carry as much in the first place. I digress.

Since 1996, Nigeria has relied almost exclusively on the importation of fuel to meet local needs. All efforts to get the refineries working again have failed. The cartel controlling fuel importation have not gone away. The refineries, despite multiple turn-around maintenance (TAM), have never come close to working optimally. One government after another has promised and failed woefully in getting them to operate optimally.

In 2006/07, just before he left office, Olusegun Obasanjo got tired of spending money on a series of TAM. He decided it was time to close the sinkhole. So he commenced the process of selling them. He got two (in PH and Kaduna) sold before he left office.
The buyer?
Aliko Dangote.

Obasanjo’s successor, Umar Yar’Adua, under pressure from multiple angles (fuel importation cartel, Niger Delta activists, ill-meaning media, politicians etc) cancelled the sale to Dangote. Instead, he joined the list of leaders who thought that spending money on TAM was a better option.

It’s 2021. Money, lots of it, has been thrown at the problem called Nigerian Refineries; money has never solved the problem. The refineries are the very definition of “more money more problems” (Biggie on my mind).

So what is the basis of believing that spending $1.5B to repair one of these 4 will change the situation? One of my good friends asserts that the Federal Executive Council must have seen reason for approving this loan. It will be good for them to share the “good reason” with us. That Afrexim Bank is willing to loan the money is not good enough. A sovereign debt will hang on the country’s neck whether the refinery works or not, so Afrexim has nothing to worry about if the money fails to work the expected magic.

The journey to where we are has been a long and arduous one. We cannot continue on the same journey when it is crystal clear that it will not take us to our desired destination. The refineries are a national sinkhole. It will be worse when they become an albatross round the nation’s neck by virtue of loans taken to repair them.

Interestingly, quite a few private entities are getting into the field of crude oil refining. Dangote decided to build one refinery after he was compelled to return the 2 he bought earlier. His Kano-born compatriot and cement competitor, Abdulsamad (BUA), is also building a major one. Several modular refineries have been completed and more are on the way. So the need for a Government-owned refinery is really no longer a priority. Definitely not a $1.5B priority.

President Buhari should do what OBJ started. Sell off the refineries. Keep a small holding (no more than 30%) if need be. Use regulatory powers to ensure that Nigeria’s national interests are protected in the new entities. If he cannot find buyers for them, let them Rest In Peace.

What the President must not do is to add to the burden of present and future generations. We can and should find better use for the $1.5B loan. Repairing a refinery is not one of them!

Greg Abolo

Blogger at The Oasis Reporters.

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