Stakeholders in the oil and gas sector have said that privatising the nation’s 450,000 barrels per day (bpd) capacity refineries is the best option for the country in the face of the current problems in the downstream sector of the petroleum industry. They said privatising them will reduce corruption, engender efficiency and create jobs.
Nigeria has two refineries in its main oil-hub, Port Harcourt, and one each in Warri and Kaduna.
The Federal Government on Thursday said that it has no plans to sell the refineries even when Diezani Alison-Madueke, minister of petroleum resources, in an interview with Bloomberg TV Africa in London last year said the government will begin the privatisation of the four state-owned oil refineries before the end of the first quarter of this year.
“We would like to see major infrastructure entities, such as refineries, moving out of government hands into the private sector,” Alison-Madueke had told Bloomberg.
It would be recalled that the government budgeted about N971 billion for subsidy on premium motor spirit (PMS) in 2013 while over N635 billion had been spent on subsidising kerosene since the last three years. Analysts say such money would have been channeled into other areas of the economy if the refineries were working efficiently.
Nigeria’s four oil refineries operate between 20 percent and 30 percent of their installed capacities.
According to stakeholders, privatising the refineries would attract investments, create job opportunities, enhance efficiency and free the downstream of all sorts of distortions that have encumbered it.
Other advantages of privatising the refineries, they explained, are that it would
put an end to payment of subsidies on some petroleum products which have been the root of corruption in the downstream sub-sector.
Although the stakeholders said there could be good and bad privatisation, they explained that if the exercise is carried out with transparency and with the right investors given the assets, money realised from such sale will be used for the public interest. But if the money realised is unaccounted for and squandered, then it would be a bad exercise, they said.
Dimeji Edward, the chief executive officer, Hyde Energy, said there are chances that the refineries would be run better if they are privatised, adding that the biggest challenge would be the subsidy that the government is paying on PMS.
Also speaking, Eddy Wikina, managing director, Treasure Energy Resources, said privatising the refineries would lead to investments and expansion of the scope of the operations of
the assets which would enable other derivatives that would bring in money to the economy to be produced.
“The assets would be turned to profitable ventures that would be run by deep pocket business men. They would run the organisations and make money which they would use to expand their businesses”, he said.
He cited a few government companies that have been turned around by their new owners which include Eleme Petrochemical Company and former National Fertiliser Company now known as Notore which have been making profit unlike when they were under the control of the government.
If the refineries are run as private entities, he said, they would fix the price of their products to match the market conditions. He advised Nigerians to be prepared for increase in the price of petroleum products under this situation.
