In 2007, Bluestar Oil Services Limited Consortium owned mainly by Alhaji Aliko Dangote and Femi Otedola bought 51 percent of Port Harcourt Refinery Company for $561 million. The sale however met with protests from labour unions and many Nigerians. Shortly after this development, Alhaji Umar Yar’Adua was sworn in as President and he immediately cancelled the transaction. About six years later and specifically in September 2013, Dangote signed a $3.3 billion deal with 12 banks to finance the building of the first private refinery in the country. The oil refinery would be the largest in Africa. The factory will produce 400,000 barrels of oil per day and 2.8 million tons of urea for fertilizing crops to produce polypropylene, used to make plastics and is due to be operational by 2016.
However, since government still maintains its refineries in Kaduna, Warri and Port Harcourt, Dangote’s investment may not be as secured since he is a big sponsor of the ruling Peoples’ Democratic Party (PDP) and enjoys a near monopoly in all the sectors of the economy that he operates in, government must dispose of its interests in those refineries so that the regime of subsidy will end.
Late in 2013 therefore, the Federal Government announced its decision to sell the refineries this year. Since then, the two industrial unions in the oil and gas sector- National Union of Petroleum, Energy and Gas (NUPENG) and the Petroleum, Energy and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) have also raised objection to the plan. The two had already staged a joint protest against the planned refineries privatisation at the corporate headquarters of the Nigerian National Petroleum Corporation (NNPC) and demanded a retraction of the plans. Such privatisation plan they argued, would not be acceptable to them because according to their leaders, it it would be contrary to the provisions of the Petroleum Industry Bill (PIB) that is currently before the National Assembly for consideration and passage.
Brushing those objections aside, government has continued to progress in its privatisation strategy but said since labour and their unions are critical stakeholders in the privatisation process, their views would be sought before the commencement of the privatisation process. According to a statement from Head, Public Communication of the Bureau of Public Enterprises (BPE) Chigbo Anichebe, government was yet to commence the privatization exercise. “The privatization process has not commenced. It will only commence after the steering committee chaired by the Minister of Petroleum Resources meets to provide the broad guidelines for the transaction. That labour and their unions are critical stakeholders in the privatization process and their buy-in will be sought before the commencement of the privatization process. This is in line with what the Federal Government did in the power sector privatisation by actively engaging labour. All the concerns of the labour unions will be looked into and amicably resolved to ensure the success of the privatization process”.
A 13-member steering was announced to ensure a smooth and transparent process for the privatisation of the four refineries and Anichebe quoted the BPE Director General, Benjamin Dikki to have said that “the directives we have is to conduct the privatization process transparently, complying with due process and international best practice. We are expected to improve on the high standards set in the power sector transaction, which has received accolades all over the world as being very transparent,” and that further details on the transaction structure and time table will be announced after the meeting of the Steering Committee.
The committee was mandated to advise the National Council on Privatisation (NCP) on the best way to privatize the refineries in a manner that would enhance the gains of the privatization programme of the FGN; review the diagnostic reports and recommendations of the transaction advisors and make recommendations to the NCP; propose modalities and make recommendations to NCP on labour matters to ensure the successful privatization of the refineries; generally oversee the process and make recommendations to NCP for the successful privatization of the refineries; and carry out any other ancillary activities relevant to the attainment of the goals of the Federal Government in the reforms and privatization of the nation’s refineries.