By Pius Mordi
MON, AUGUST 22 2016-As a former federal Commissioner of Petroleum Natural Resources as well as chairman of Petroleum Trust Fund (PTF), President Muhammadu Buhari has a fairly deep insight into the trappings and dynamics of the oil industry. He knows crude oil drives the economy and accounts for over 90 percent of Nigeria’s foreign exchange earnings. He wants to keep a tight rein on developments in the oil industry, a desire that informed his decision to retain the petroleum resources portfolio in his cabinet. That the international price of oil collapsed as he became president was quite frustrating for him as he has frequently wondered aloud.
Buhari’s lamentations on the status of the oil industry epitomise the perception of successive leaderships of the country on managing the oil economy. For as long as oil is pumped from the wells and buyers are there to pump petro-dollars into Nigeria’s economy in equal measure, we can keep importing refined products.
From being a record importer of premium motor spirit and other products, Nigeria is now gearing up to become an importer of crude oil. Yes, crude oil which over-production by Nigeria and other oil exporting countries has elicited a sustained depression in the international market is about to join the exotic and insane list of goods shipped into the country. With the ongoing insurgency in the Niger Delta severely hampering the export of crude and supply to the existing refineries, President Buhari has directed the Nigerian National Petroleum Corporation (NNPC) to explore the possibility of easing the challenge on Kaduna refinery by importing crude oil from Chad and Niger Republic. This much was confirmed by Abdulahi Idris, public affairs manager of Kaduna Refining and Petrochemical Company.
Presently, Nigeria’s array of four refineries operates at a maximum of 330 percent capacity utilisation at the best of times. At inception, the Kaduna refinery was supposed to be fed through pipelines from the oil fields in the Niger Delta while it also had the capacity to refine heavy crude, the blend that is not available in Nigeria but can be procured from Venezuela, one of the fellow Organisation of Petroleum Exporting Countries (OPEC) members.
A combination of the militancy, neglect of turn around maintenance schedules and the rusty and dilapidated pipelines has stifled the infrastructural chain in the oil industry. Just as TAM schedules of the refineries were mindlessly ignored, the network of pipelines which linked the major state capitals across the six geographical also had their maintenance protocol that would elongated their lifespan routinely breached.
The challenge of change in the oil industry is to adopt a holistic approach in addressing the issues. Militancy, poor capacity utilisation, unsafe and old pipeline networks as well as insecurity are interconnected and interlocking. The disruption of supply of crude oil to refineries is not restricted to Kaduna alone. Shortly after the refineries in Warri and the two in Port Harcourt were brought back on stream, albeit in limited capacity, their supply chain was vandalised with trucks deployed to deliver the crude.
If the planned importation from Chad and Niger solve the challenges facing Kaduna refinery, what happens to the Warri and Port Harcourt counterparts? Exploring this option is not creative nor will it be effective. On the contrary, the impression is that Buhari may not be sincere in his offer to seek a peaceful negotiation with militants. On the outset of resurgence of restiveness, the president had vowed to “crush” the Niger Delta militants as he was doing with Boko Haram. Is the negotiation offer being jettisoned so that the militants can be crushed? That is hardly a viable option.
The militants are not like Boko Haram. They do not attack the indigenous population. They do not take territory. They are open to negotiation. Late President Umaru Yar’Adua and his successor, Goodluck Jonathan, demonstrated the power and effectiveness of peaceful negotiation. It may not have been a perfect arrangement but it worked and can still work with some adjustments. Buhari does not need to reinvent the wheel. He only needs to shed the toga of militarism and primordial considerations to do the right thing.
Nigeria has been ridiculed by the international community over her failure to resolve the supply gap in refined products through local production. We have imported virtually every conceivable and inconceivable consumable product without any let or hindrance and we are paying for those infractions today. Importing crude oil from our northern neighbours simply because the foreign exchange is there is an unpardonable indiscretion.
Under the change mantra of the Federal Government, the expectation of the people is that the fight against corruption will be given its true definition. Embezzlement of funds is not all there is to corruption. Recently, Dr. Ibe Kachikwu, the Minister of State for Petroleum, identified modular refineries as the key to resolving the perennial shortage of refined products. This is precisely what a special military unit, the Joint Task Force (JTF), has been battling for over a decade. For every “illegal refinery” destroyed by the JTF, a dozen new ones spring up the next day. A little inventiveness based on professional advice and a commitment to choosing the best policy for the country should top the log of options being considered by Abuja.
Importing crude oil from Niger or Chad, two new producers that are almost self sufficient in the production of refined products, is a crude and insulting option to adopt. Beyond that, it is a tainted proposition that will only reinforce emerging perceptions of mischief and sectional colouration in Buhari’s game plan in the management of the oil industry. That will hurt the country real bad.
