In an effort to minimise the importation of petroleum products and even produce for export, the Nigerian National Petroleum Corporation (NNPC) recently expressed its interest to acquire some stakes in six private refineries across the country, which are reportedly being developed to ensure national energy security. The corporation also explained that the plan to seek equity participation in the private refineries is in line with the Federal Government’s policy directive, which stipulated the mandatory participation in any privately owned refinery that exceeded 50,000 barrels per day.

However, it pointed out that the plan would not undercut its commitment to the rehabilitation of its own refineries and strengthening of the domestic refining sector.

On the latest move to invest in some private refineries, NNPC says it has identified six refinery projects in which it has intentions to seek equity participation, with five of them at development stage. Dangote refinery is the largest of them all, followed by Watersmith refinery in Imo State which was recently commissioned.Altogether, the identified refineries have a role in adding value to the nation’s resources and ensuring energy security and stimulate strategic partnership with competent investors in the country’s oil and gas value chain, especially where it currently has been operating on a sole risk basis.

Undoubtedly, we support plans that will strengthen our domestic refining capacity and guarantee national economic security. However, such move must be strategically designed and transparently executed in collaboration with the owners of the private refineries. There is no doubt that fuel imports and subsidy are depleting our foreign reserves. The situation requires the strengthening of the domestic refining sector. For instance, figures from the National Bureau of Statistics (NBS) have shown that fuel imports gulp over N2trilion annually. This, according to experts, is worth over 10 mini-refineries. The value of imported Household Kerosene (HKK) also increased from N20.2 billion. Nigeria could, therefore, become self-sufficient in petroleum products if the private refineries have been completed and made to run efficiently.                                                      

Consequently, the rising fuel imports has put enormous pressure on the country’s external reserves and contributed to the worsening economic situation. For years, government has been unable to fix the refineries, forcing the country to rely on importation of about 95 per cent of its fuel consumption, according to the NBS. Government has refused to heed the call to privatise the refineries. Instead, it has continued to interfere in commercial aspects of the downstream sector.                            

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We believe that private sector participation in the refining of petroleum products will make our refineries work at internationally acceptable capacity utilisation level if properly executed. The time has come when the private sector should be encouraged to take over both the risk and returns associated with the market economy. The $12 billion Dangote refinery being constructed on 6180 acres of land between the Atlantic Ocean and Lekki Lagoon, Lagos State, is expected to process about 650,000 bpd of crude oil per day.                                          

Private sector participation in ventures like refineries is the right thing to do. It is high time that government stopped money guzzling ventures, especially at these financially dire times. Government’s expenditures on petroleum imports will continue to rise until it takes a holistic approach to getting our refineries back on stream or build new ones. It is not enough to seek equity participation in private refineries. It must show pragmatism in its deregulation and privatisation programmes.

With over 6,000 products derivable from petroleum products, petroleum should be integrated with other sectors in terms of forward linkages. In that way, the plan to strengthen our domestic refining sector will yield the desired dividends. Beyond oil, the government should also muster the economic and political will to diversify the economy through mechanised agriculture and coordinated exploitation of our abundant solid minerals. Nigeria’s over-reliance on fossil fuels for its economic survival is becoming detrimental to its overall development.