Nigeria refineries are beyond repair – privatization is the on …

The recent conversations triggered by the NNPC management led by Bayo Ojular on the potential privatization of the three state -owned refineries of Nigeria are not only welcome; They have been waiting for some time. These refineries, although incorporated as autonomous corporate entities under the property of the Nigerian state, have actually become empty shells: technically insolvent, chronically non -operational and structurally non -saving.

Years of corrosion, erosion and general environmental wear have undermined the integrity of the refineries process. In addition to physical decay, the refineries have never been practicable as concerns. Financial independence were missing, operating without adequate responsibility for profits and losses or significant liquidity. The result was an unsustainable unloading on national resources.

Nigeria has paid large sums in these failed activities, about 3 billion dollars in Port Harcourt, Kaduna and Refineries alone in recent years. These efforts have produced little more than the media fanfare; The plants quickly returned to dormant. Since 2008, about 18 billion dollars have been spent on the rehabilitation of refineries, the emolo and the cost of staff throughout the country with nothing value to be shown. This broken model bruscily contrasts with the share participation of Nigeria in the Nigeria Liquefied Natural Gas project (NLNG), a rare success story: profitable, projection of dividends and led by the discipline of the private sector.

It is in this context that my learned brother, Femi Falana, San, has made the important legal point that the NNPC cannot in itself sell the refineries. This is valid. But pursuant to the Petroleum Industry Act (PIA), NNPC Limited, together with the Ministry of Finance Incorporated (Mofi) and the Ministry of Petroleum, can enhance the National Council for privatization and marketing (NCPC), through the public companies office (BPE), to start a transparent sale of shares of shares. Unless the NCPC law has not been changed to exclude the NNPC branches by its person, and are not aware of this, this legal path remains practicable and constitutional.

The recent signal of the CEO of the NNPC group Bayo Ojulari according to which the sale of the refineries is still “not outside the table” is a step in the right direction. Reflects a sober recognition that years of rehabilitation have produced decreasing returns. The imported components are often misaltered with the aging infrastructure. Financial logic is broken. Even if we revived plants today, their sustainability remains doubtful. They cannot work efficiently and profitablely such as the new refinery and the petrochemicals
Experts of the whole sector have mentioned that privatization is a legal way for nnpc to get out of this loss of initiatives.

Privatization is not only legally possible; It is economically essential. Unlike the joint ventures (JVS), which maintain the NNPC exposed to expensive cash agreements, privatization can generate immediate income, reduce the budget pressure and release capital for the new exploration. The experience passed with the participation of 49 % of Nigeria in Nlng provides a clear lesson: a smaller participation with a stronger partner is more advantageous than a wider participation in a company in the absence. According to my strong opinion, we should reduce our equity to these companies to 20 % and give the rest to generate liquidity and efficiency.

Requests of privatization are no longer limited to the wishes and consultants of policies. The Association of Nigeria producers (Man), the oil marketers and the wider organized private sector (OPS) have now combined the choir. They argue that only a completely privatized oil sector can break the cycle of inefficiency and dependence on imports. It is difficult not to agree when we examine successful models such as the Petrochemical Eleme plant or the stabilization efforts in progress by the refinery complex of dance and petrochemicals in Lagos.

The arrival of dance is timely. While its capacity of 650,000 barrels per day will facilitate the lack of fuel and the import invoices, it must be seen as a complement, not a substitute, for the systemic reform. The Federation must move away from direct operations and embrace the regulation. The government should no longer participate in managed companies. From the merger in aluminum to the pulp and paper, to fertilizers to airlines, our track record with state -owned companies is clear: inefficiency, waste and bankruptcy.

Nigeria has a comparative advantage in different sectors, for example textiles, which have collapsed due to the abandonment of politics and the lack of competitiveness. The debate of this referent does not concern only activities and oil; It is the model of economics that we want to build. We must move the engine of growth from dependence on oil to the development of human capital, to digital innovation, agriculture and marine economies. This will not happen if we continue to pour public funds into a refining system blocked in the 80s.

The reformist instinct of the Tinubu Administration must now be combined with courage. President Bola Tinubu must give the NNPC team led by Ojular the political support to make difficult, necessary and not sensual decisions. The country must also support the EFCC and international forensic auditors in discovering the truth behind the billions spent in the last decade, in particular within NNPC, PPMC and refinery branches.

This moment is a resolution test. The cost of the delay is not only cheap; It is national political urgency. We take the opportunity for once to do it well.

■ Dan D. Kunle is a company consultant.

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