Furore Over Plans To Sell Refineries In 2014

The National Union of Petroleum and Natural Gas (NUPENG) is currently threatening fire over announcements that the Federal Government will sell off four oil refineries in the first quarter of 2014.

 

Petroleum Minister, Diezani Alison-Madueke, confirmed in London that major infrastructural entities such as refineries would be moving out of government hands into the private sector.

 

Billionaire businessman and member of the National Economic Management Team, Aliko Dangote earlier in the year commenced the construction of a giant petroleum refinery that is expected to begin production in 2016. It should also be recalled that in the twilight President Olusegun Obasanjo’s administration in 2007, he hurriedly concluded sales of refineries to Dangote and Femi Otedola of Forte Oil (formally Zenon Oil). The sales were nullified by President Umaru Yar’Adua soon as he settled down in office later that year.

 

She said that “government does not want to be in the business of running major infrastructure entities and we haven’t done a very good job at it over all these years.”

 

Alison-Madueke stated that a presidential audit of the facilities last year recommended the sale of the refineries due to inadequate government funding and “sub-optimal performance.”

 

The refineries, which have a combined 445,000 barrel-a-day capacity, should be privatized within 18 months, according to the report submitted to President Goodluck Jonathan in November 2012.

 

While Nigeria is also Africa’s top crude exporter and the most populous with more than 160 million people, it relies on fuel imports to meet more than 70 percent of its needs. Its state-owned plants operate at a fraction of their capacity because of poor maintenance and aging equipment. Nigeria also exchanges 60,000 barrels a day of crude for products with Trafigura Beheer BV and a similar amount with Societe Ivoirienne de Raffinage’s refinery in Ivory Coast, according to Nigeria National Petroleum Corp.

 

Improvements to the two-unit 210,000 barrel-a-day Port Harcourt refinery, the country’s biggest, will be completed by the end of the year, to be followed by enhancements at the Warri and Kaduna sites in 2014, according to the NNPC. Warri has a daily processing capacity of 125,000 and Kaduna 110,000 barrels.

 

“We are right now undergoing a major turnaround maintenance program” of the refineries, Alison-Madueke confirmed.

 

Towards the end of former President Obasanjo’s administration in 2007, the refineries were sold to companies owned by billionaire Aliko Dangote and Femi Otedola, but the sale was reversed by the President Musa Yar’Adua government that took over from Obasanjo.

 

Nigeria, a member of the Organization of Petroleum Exporting Countries, produced 1.99 million barrels a day of crude in October.

 

But NUPENG insists that unless there is an agreement between staff unions in the oil industry and government over the issue, it will paralyse the plans.

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