It is necessary for us at this point to compare notes with Cote d’Ivoire, our close neighbours, in terms of performance in domestic refining of crude oil, and try to decipher the methodology of our own local operations in the recent past. This is pertinent for several reasons, most important of which is that we need to learn from their exploits and therefrom correct our past mistakes.
Cote d’Ivoire and Nigeria built their first refineries the same year, 1965. Cote d’Ivoire has been 94 percent dependent on Nigeria’s crude supplies since inception. That country progressively improved on its output from 700,000 to 4,000,000 tonnes per annum (on full capacity utilisation, with two crude distillation units that produce about 82,000 barrels per day). According to 2007 financials, Cote d’Ivoire’s declared profit after tax of about N304.5 billion was its exports accruals for 78 percent of the total locally refined products. As small as its facilities are, it is still positioned in the international oil market as “a net exporter of refined petroleum products”. Do we now start comparing ourselves with Cote d’Ivoire based on its net exporter status of refined products, or with its paltry volume of 82,000 bpd output performance when our own 60,000 bpd plant built along with Cote d’Ivoire’s in 1965 is comatose?
We need to draw our attention to the fact that it is only by 2018, basing on today’s planning for the Greenfield refineries to come on stream, that we can see ourselves as “self-sufficient” for our local daily demands; that is, if the current combined installed capacity of the existing refineries, which is 445,000 bpd plus the proposed Greenfield ones presently downsized to 400,000 bpd, are all functional (i.e., a total of 845,000 bpd). It is only from then – if, for instance, our daily need for PMS is still put at 40 million litres – that we can boast of self-sufficiency with an excess of about 15 million litres for export. From this alone, we would be making a net profit after tax in the neighbourhood of about N900 billion from the export of PMS (extrapolating from the indicated financials of Cote d’Ivoire of 2007), all things being equal. Then there wouldn’t be any more wastage in the form of the so-called fuel subsidy, nor would there be acute fuel scarcity or smuggling of the products to neighbouring countries. Rather, we would have a net surplus for exports from our domestic refined petroleum products that would be sold officially in the international market.
Sequel to that, the privately-owned local refineries, like Amakpe in Akwa Ibom, Orient in Anambra, and many others, will in future add up to yet another giant one being proposed by Dangote, with installed capacity of 400,000 bpd plant worth $8 billion, expected by end of 2016. These local refineries will come up with their products, ranging from gasoline, diesel, jet fuel, fuel oil and liquefied petroleum gas (cooking gas) both for our very large, attractive local market and for exports. Outside these petroleum products, it is noteworthy that the NNPC presently produces petrochemicals from its Kaduna and Warri plants, with the following range: polypropylene, carbon black, linear alkylbenzene, benzene, heavy alkylate and deparafinated kerosene. It is only at the point when we must have comfortably become a net exporter of refined petroleum products that I can agree with the comment earlier made by the NNPC GED, Refining and Petrochemicals, Anthony Ogbuigwe, that “all our refineries are doing very well”. For now, one can only say it’s too early to celebrate.
One expects our NOC, like its global contemporaries, to wake up and engage fully in profit-making ventures/operations for the country from oil and gas reserves. This is urgent given the abundance of the factors of production at our disposal in the downstream sector. From the upstream oil sector, we need to be aware that our crude export is currently facing a shock occasioned by the significant drop in the USA’s import of crude from Nigeria. Over the past five years, it has been observed that there is a 63 percent drop in US dependence on Nigeria’s sweet crude as a result of growth in its own light shale oil production. May it now please our NOC to make optimal use of the opportunities the nation has in the oil sector for us to really become self-sufficient as we approach 2018? Once we become self-sufficient, there will no longer be need for Petroleum Support Fund (PSF) account through which fuel subsidy payment is disbursed (a fund pooled together by the presidency and the governors). I will rather suggest that the proceeds of this particular account be moved into the Sovereign Wealth Fund (SWF) account, when that time arises, to further improve its present savings arrangement for the rainy day. Overall steady growth in our foreign reserves will herald a healthy economy in the nation. To make Nigeria great is our watchword; it is the ultimate collective goal for the nation’s economic glory among the comity of nations. This can be achieved if only NNPC will launch the country as “net exporters of refined petroleum products”.
Nwachukwu writes from Onitsha, Anambra State.
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