For Nigeria to have value addition from her hydrocarbon resources, the federal government has been urged to completely hands-off refinery business and allow the private sector drive it for efficiency.
Speaking on the subject during a virtual Dialogue on Petroleum Sector Reform, organized by the Nigeria Natural Resource Charter (NNRC) and Business Day on Thursday, experts unanimously said it was high time government hands off the business and create a regime to promote private management of the refineries.
The Nation’s three refineries recorded combined losses of N154 billion in 2018, with Kaduna refinery recording zero revenue within the period, according to an audited financial statement published by the Nigerian National Petroleum Corporation (NNPC) in June.
Industry expert, Mr. Israel Aye stated that Nigeria suffers huge economic shocks during oil price volatility because it is just an extractive country despite being Africa’s largest crude oil producer and holding the continents second largest reserves.
“Nigeria is too large to build its economy on imports, we have to create frameworks for utilization, we need to move to value addition,” Aye said.
He noted that government has proven not be the best in managing refinery business based on track record, adding that government should simply hands off and perform regulatory functions.
“We should create a framework that promotes private management of refineries, we should encourage small and large scale refineries across the country,” Aye said.
Speaking on a similar note, oil sector analyst Joseph Nwakwe, insisted that the dominance of state owned entities in the sector is creating problems and depriving the country from attracting the right investment across the industry.
“Nobody wants to compete against a state owned monopoly; government should be more of a regulator than commercial player. No serious company will come and invest where government has about 80percent hold on the industry,” he said.
He stated that it is an economic crime for Nigeria to be importing refined products, maintaining that our imports would have been cut in half by now if the refinery sale had scaled through, which would have resulted in less pressure on the Naira.
The expert noted further that public services in Nigeria has generally become inefficient, not just in the oil sector, but across all sectors, underscoring the need why a business as critical as refinery management should be private sector run.
Also speaking, Dr Uduimo Itsueli, Chairman of Dubri Oil, who agreed with other speakers, emphasized that government does not need to spend time on refinery management.
According to him, the abysmally performing state owned refineries should be sold, while the government should create an environment for private sector to run the refinery business.
The dialogue was organized by the NNRC and Business Day to review the governance gaps revealed by the NNRC’s 2019 Benchmarking Exercise Report (BER) in the petroleum sector. The NNRC, a non-governmental, non-profit organization, has been in the forefront of advocating for reforms in Nigeria’s oil industry, particularly for the passage of the PIB, a proposed law intended to transform the sectors management and better the lives of citizens.