How Nigeria’s Refineries Brews Nothing But Corruption By Azubuike Ishiekwene

The conflicting statements of President Goodluck Jonathan and the minister of petroleum resources, Diezani Allison-Madueke, on the sale of the nation’s four refineries provide a one-word summary of the state of affairs in the country: confusion. And it’s getting messier all the time.

In November, Allison-Madueke announced that Nigeria’s four refineries located in Port Harcourt, Warri and Kaduna would be sold. Her reasons were clear, simple and sensible. A fate worse than that of a jalopy has befallen the refineries. In the last two years, the government has spent at least $1.6billion on turnaround maintenance with nothing turned an inch. And that’s just recent money down the drain in a country already bleeding from industrial-scale oil theft. Since the phrase “turnaround maintenance” (TAM) was popularised under military president Ibrahim Babangida, billionaires have been made but the fortunes of the refineries have only got worse.

The four refineries are supposed to provide a total refined capacity of 450,000 bpd, but they often run at one-third their capacity and sometimes produce barely enough to fill a tanker. So, what’s their use? For all that is ripe and pluckable, it seemed sensible that Jonathan’s government finally decided that enough was enough and the refineries had to go. In December, one month after the minister’s announcement, the Bureau of Public Enterprises followed up with an announcement that “the president has approved the privatisation of the nation’s four refineries”.

Then came the U-turn. Two weeks ago, the president’s spokesman, Reuben Abati, said the government had changed its mind and had no plans to continue with the sale. It’s a measure of how serious the government is taken that the catastrophic U-turn almost went unnoticed. It’s been said that the government couldn’t help suspending its plan because the unions were threatening to start the New Year with a strike. I’ve also heard it said that, given the politically charged atmosphere, the government needs more time to consult and save the public from any supply disruptions that may follow a unilateral implementation of its plan.

These convenient excuses hardly address the main problem: the government is paralysed by incompetence. There’s no one in charge and the sore is festering. By law, the office of the vice president is in charge of privatisation of all state assets. In all the confusion since the planned sale was announced and then reversed, there’s not been a word from the office of Vice President Namadi Sambo about exactly what is going on. The man is too scared to speak up and the president is too distracted to care. The country is adrift.

It’s OK to fret about timing and the politics of the sale, but what about the damage that this tardiness is doing to the image of the country and the value of the assets? If the government knew that it was not going to follow the sale through, why did Allision-Madueke announce the plan? Could she have made the announcement without recourse to the vice president and the president?

This is not the first time government will be fooling around with a plan to sell the refineries and anyone – even a half-witted fellow – would expect that government should have learnt from its past mistakes. In 2007, former president Olusegun Obasanjo sold the Port Harcourt refineries to Dangote. President Umaru Yar’Adua later dramatically reversed the sale because, according to insiders, the valuation was flawed. The same NNPC folk who played a role in munching the valuation turned around to tell the late president that they could manage the refineries. Of course, they could and have since been managing it for their own benefit.

It’s a surprise that Jonathan, who was then vice president and chair of the privatisation council, took nothing away from that disastrous experience. Dangote has since moved on and would, in a few years, be commissioning a refinery that would produce 415,000 bpd, roughly the combined capacity of the four existing refineries, at a fraction of the billions of dollars spent on annual TAM over the years.

I’m not suggesting that the government should fling national assets at the price of toothpicks or that weaning the public from the mush attached to such sale is an easy task. There isn’t even a guarantee that privatisation will deliver the results in the short run. Yet, the history of how the refineries and other major public assets have been managed so far leaves the country with few options.

Countries with little or no oil deposits like India and Singapore are major refining hubs. Even our neighbours – Niger and Cote d’Ivoire – have taken advantage of the huge supply gaps to set up refineries by our borders, while oil companies operating in the country are so beset by the uncertain operating environment and corruption that they would rather drown in the liquid than set up refineries here.

We are stuck with four huge money-guzzling monuments, loved by the unions and other vested interests for what they can get out of them and cherished by the public for nothing but their nostalgic value. As it was with the Zambian copper mines at the turn of the millennium, we could wake up one day and find that we’ve been hugging smoke. It’s convenient politics but, trust me, it’s the evil day postponed yet again.

Try Visa-free Gay Entry

Since it came to light that President Goodluck Jonathan has signed the anti-gay bill into law, the US and a number of other western countries have been deeply upset. They are even threatening penalties against the government for what they describe as “an obnoxious and discriminatory law”.

Seriously? If they really want to help, they should give all gay people visa-free entry into their countries, where a man can call a man his wife and a woman can call a woman her husband. Funny. We have made our law, and that’s it.

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