…Says country lost N120b operating idle facilities
The Society of Petroleum Engineers (SPE), has urged economic managers to sell Idle refineries to private sector operators to meet Nigeria’s oil and gas needs.
According to the Chairman, SPE, Joe Nwakwue, keeping refineries idle is not in the interest of the economy, as the nation continues to incur expenses even when they are idle.
He added that going by the yearly report published by the Nigerian National Petroleum Corporation (NNPC), showed that the country Nigeria lost about N120 billion operating the idle refineries over the years.
The NNPC boss, Mele Kyari, had attributed the failure to fix the refineries over these years to strategy challenges, as the government never knew what to do with them, adding that the Corporation didn’t get the right advisory services and the right strategy to go through with it.
Consequently, Kyari said this called for a change in strategy and a new framework, to help NNPC and prospective investors to put their money down and ultimately change that equation, by first fixing the refineries to make them attractive.
Nwakwue stated this at a press briefing to announce the SPE Nigeria Energy Industry Transformation Summit (NEITS), scheduled to hold from the 25th-27th of August.
In his words: “It is in our interest that the refineries are optimally run, and we believe that the private sector is key to achieving this. It is sad that we have refineries that are sitting idle. They do not just sit idle, but we spend money to keep them idle, and that is a huge drain on the nation’s economy.
“If you look at the annual reports of NNPC published, you will see clearly that about N120 billion is the operating loss of those facilities, and the nation has been incurring this over the years. So, it is not in our interest to be pumping money into facilities that are not productive.
“We should have sold these facilities to those who can run them a long time ago; maybe if we did, we would not be importing the quantity of products we are currently doing today. If we have saved half of our import, the pressure on the Naira will not be this much.
“For me I think we should have sold them 10 years ago, but let us be careful to note that more refineries might not address our PMS space at least not now,” he said.
While admitting that the policy to get more refineries working was great, he noted that it was not going to address the PMS import needs in the near term until the refineries are fixed.
“We will still be dependent on importation. Where assets are lying fallow is not in the interest of the country,” he added.
Meanwhile, Nwakwue described the marginal field programme as a success, but needs to be reviewed for better performance.
“It is time to fine-tune it for better outcomes. We should do whatever is possible to make sure that we do not just give people assets, but assets that they can profitably develop. Our vision is to see local companies that have developed assets are adding to the national outputs employing people creating economic activities,” he said.
He pointed out that Nigeria has failed to diversify the oil and gas sector by selling primary commodities, which he said does not maximize value addition for the country
“If we had diversified the sector, our story would have been different. If we tell ourselves now that five years from now, Nigeria will no longer export crude, but refined products. To me I believe this is achievable. We must add value to our commodities and when we do that, we are better off for it,” he said.
He also called on the federal government to fully deregulate the market to achieve full potential of the oil and gas industry, saying: “When there is price control, people will not feel free to invest and yet we want private capital to come into this space. Those are clear challenges from the policy side that the government needs to address.”
He argued that the Covid-19 pandemic has brought about a reduction in demand for Nigeria’s major foreign exchange earner, as reduced demand resulted in low prices leading to loss of jobs.
“The impact on petroleum engineering as a whole is huge and negative. It is a tough period we are in, and things are not looking rosy,” he noted.