• Friday, December 01, 2023
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The gains in domestic refining (3)


I want to passionately persuade the Economic Management Team (EMT) of Mr. President, ably headed by Ngozi Okonjo-Iweala, minister of finance, to dwell, thinker and brainstorm over the suggestion which I shall opine very shortly. I am not just postulating but, making a contribution I feel I should drum to our hearing, based on my age-long practical experiential knowledge in commerce.

This counsel though, requires professional touch from our financial experts (EMT), if it sells through, shall be a cardinal tool with which the FG shall use to turn around the economy for better at an astronomical speed, indeed a very unprecedented initiative that shall be applied in our growing downstream oil sector to skyrocket our economy like never before.

It took China 30 years (from 1978 when Deng Xiaoping proposed their economic reforms) but, ours could just be about 10 years to get there, and be fully industrialised, if God so wills. The strategy shall surely attract a standing ovation and applaud (to my mind) from all over the world for Nigeria, for such economic feat. This definitely, shall be a legacy our generation could bequeath to our future and younger generations, in the scheme of our economic developmental strides at the international oil market. The future of our national growth and development, be it social, economical or political, depends on our today’s sacrifices and the political will unleashed by our present leaders today because, our tomorrow’s national achievements and success solely lean on our current positive performances, as a people.

Our present daily crude oil output for April stood around 1.73 million barrels. It is also true that the nation ambitiously aspires to increase this to around 4 million barrels per day in future but, the OPEC’s quota for Nigeria, we should be mindful not to exceed it; more so now that our crude export is equally facing supply challenges in the North America. Our domestic refining operations need a very special attention with growth support. The present deregulated regime in the downstream sector is an incentive for prospective investors but, I continue to suggest that the FG could go further to apply a “carrot” strategy that would further woo Direct Foreign Investment (DFI) to that sector. Based on our annual budget, this strategy shall not in any way affect or have an adverse impact on our budget/economy. Rather, it will create a very high productivity profile that shall be positively felt in all known aspects of the economy, with growth rate appreciating exponentially (affecting all the three tiers of government, industries and the citizenry alike), and at the same time, drastically forcing down inflation, stemming oil theft, creating a genuine wealth and generally improving the standard of living within the economy!

By simple arithmetic, if for instance our upstream sector comfortably supplies between 2.7 – 3 million barrels every day, at $102.5 per barrel at the export market (the prevailing international market rate). Our annual proceeds from crude exports have not in any way been affected in the nation’s current account or our foreign reserve (by the above computation) if, in addition the nation adopts a strategy to encourage all domestic oil refineries (both state-owned and private-owned alike) with say, an extra 1 million barrels of crude or more, being their locally sourced raw material supplied to them on daily allocation, at the rate of our prevailing national budget’s “oil benchmark,” for instance in 2013 at $70 (of the amendment act before the National Assembly) or $75 per barrel. That difference of about $30 discounted in the downstream sector for local refiners is a regulated price discount that shall eventually be gained back 10 times because, this instant gain for the manufacturers (an edge over their contemporaries outside) is internalised and shall be recouped through taxation. It is an all-inclusive source of wealth creation with a spread that is evenly distributed within the economy.

This strategic policy (if adopted) is a workable and feasible pricing format for the downstream sector, in practical terms. This shall keep the sector to be swarming with all kinds of investors being attracted into the economy; booming for industrialisation along the value chain of the downstream sector. If we improve and have that ambitious daily crude output capacity of say 4 million barrels per day, oil theft will be curbed due to daily efficient utilisation/consumption of crude produced on daily basis at both the upstream and downstream ends of the operations, without daily glut/carry-over that breeds inefficiency on daily stock-taking that gives room for such sharp practices and the nefarious acts. Our GDP growth rate shall be on a progressive increase, the springing up of petrochemical plants and other related operations for all kinds of raw materials for the manufacturing industries with trading on such products shall be attracted and equally be on the increase. The value addition on all products along the oil value chain shall also add to positioning our export portfolio as a multiple products exporter of intermediates and finished goods. The fuel self sufficiency within the economy shall provoke a pump price competitiveness among all the products retail marketers, and the prevailing market force shall bring down our pump price for PMS (for instance) to even bellow N50 per litre then, which will further force down inflation and also positively affect the life of the common man in the society.

The petroleum resources minister, Diezeani Alison-Madueke and co. (in the national planning) I wish, shall receive light to catch this vision and the wisdom in this suggested national strategy that shall keep us growing at a galloping speed; not just in the oil alone but, equally in the aspect of our gas resources. The work being presently done by the Christopher Kolade’s team, on the Subsidy Re-investment Programme (in developing infrastructure and providing social safety nets in the economy) shall by no means be disrupted by this opinion. We earnestly pray that we run with this vision in our national socio-economic struggles for overall national development. 


Nwachukwu writes from Onitsha,

Anambra State.

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