By Omoh Gabriel
Nigeria is a country that is very difficult to understand its political and economic actors. They seem to be in a cyclical rhythm feeding on each other. Some call them cabals while others see them as necessary evils. It is a country where leaders take liberty at deceiving the populace. They will never come out with the truth. Nigerian businessmen and civil servants have also taken a cue from the political class and double speak on issues that affect the generality of the masses. As I seat in front of my laptop to write this piece, I recall vividly that when I pose some critical questions to principal officers of Dangote refinery in Egypt and some government functionaries during the Intra-Africa Trade Fair, there was no answer forth coming. One top level executive of Dangote group who should know told me these are questions we should not be asking now? They could truncate the project. For sure, Nigeria has had several energy crisis and who ever intends to provide a lasting solution is welcomed, but it must be with the right attitude and approach. When Alhaji Aliko Dangote a shroud business man by all standard made a futile bid to buy off the ailing Nigeria refineries during Obasanjo presidency, he was stopped by those who feared his daring business foray. Perhaps, if he had succeeded then things would have improved and Nigeria would have been better for it.
Dangote venture into petroleum product refining has received commendations from the federal government, organised private sector and the Central Bank of Nigeria. The site of the refinery has become a Mecca of sort for Nigerian politicians. Last month the governors’ forum took their turn. From all indication, the Dangote group and the government are engage in hide and seek game. They are shying away from the inevitable, the mode of operation of the refinery. The government and Dangote Group have not told Nigerians the modality and operational strategy of the refinery. All Nigerians are hearing is that the refinery will be saving Nigeria from importing refined products. The CBN has come out to state categorically that the refinery will help conserve the nation’s foreign reserve by saving foreign exchange that would have been used to import fuel.
Both Dangote and the federal government have not told us how this will be made possible. In my elementary economic understanding, the refinery is sited in an export processing zone. Products from such facilities enjoy export status into the country where they are sited.
Is the Nigeria state going to buy from Dangote in Naira or in dollar? The entire project is at the moment to the best of my understanding of the Nigerian economy shrouded in secrecy that will do no one any good. It is beret with institutional impediments that needs to be removed before it becomes operational. The major issue here is how is Dangote refinery going to source its feed stock? From the international oil market or is it going to get crude from Nigeria at international market price or at reduced price? In what currency is this going to be transacted? Going by the current price regime of petrol in Nigeria market, is the government going to buy off the entire product need of the nation? Is the government going to allow Dangote a free hand to sell and market its product but at whose price, Dangote or federal government’s? What about the labour union that have resisted previous attempts at deregulation of the pump head price of fuel. If Dangote is to sell at his price, government must immediately deregulate the oil sector. In which case it must privatise the depots across the country and the pipelines to enable other investors come into the sector and government must immediately engage and educate all relevant stakeholders on the need for government to take the back seat in the oil and gas sector.
By privatising the depot, it will allow for a new approach to product distribution in the country. Investors who buy into pipeline will put them into proper use and will enable products to be moved through pipelines. The use of trunks and the continued siting of petroleum depots in residential areas with their attendant hazards would be a thing of the past. But if government is to buy up the product through NNPC and distribute as usual, there is nothing new the refinery is bringing to the table. Equally yet to be explained is the strategy to be adopted by the NNPC when the refinery is operational. At the moment the NNPC gives crude to refineries outside the country to refine for it, is it going to adopt the same strategy? What about the price at the pump head, is it going to remain the same, who will bear the cost of subsidy, the NNPC or the federal government? The Dangote group we all know will prefer to be allowed to determine its own price and sell in the open market. Already there is palpable fear in the down stream sector especially among depot owners that Dangote refinery will run them out of business. This is the prayers of most Nigerians as the cabals that own these depots are bent on making Nigeria a perpetual import dependent country. Dangote refinery coming on streams poses a lot of unanswered questions that both the government and the promoters of the refinery must answer now before the unintended begins to happen. Already news reports have it that Dangote has placed order for hundreds of trunks that will deliver its refined products to filling stations across the country. The conglomerate is opening filling stations outlets. This to any rational person is a signal to what is running in the mind of the business guru. These uncertainty to say the least are worrisome.
The minister of state for Petroleum is telling Nigerians that government would crash the price of petrol by providing Compressed Natural Gas as an alternative source of fuel for vehicles nationwide not through any arrangement with Dangote refinery. This is confusing, is the minister saying the government has lost faith in the much orchestrated Dangote refinery? Thinking of reducing subsidy this way is pointer to the fact that this government is not ready to change its petroleum product marketing strategy. The CNG if we must know is a fuel that can be used in the place of Premium Motor Spirit, popularly known as petrol. It can also be used in the place of diesel and Liquefied Petroleum Gas. Speaking on what the Federal Ministry of Petroleum Resources would work on this year during a press conference in Abuja, the Minister of State for Petroleum Resources, Timipre Sylva, stated that the Federal Government was working for the passage of the Petroleum Industry Bill before May.
Sylva further declared that the Nigerian oil and gas sector was retrogressing, particularly when compared to oil sector of other nations. He stated that the use of petrol had caused serious drain on the finances of the Federal Government as a result of the continued subsidy on the commodity. Explaining how the government intends to crash petrol price, Sylva said, “When you say we are thinking about reducing the pump price of petrol, I could easily say yes. Why I could say yes is because we are looking at giving the masses an alternative. “Today, we are using the PMS but what we want to do, going forward, is to see that we are able to move the masses to the CNG. If we take all transport vehicles to the use of the CNG, you would have impacted the poor positively.”
Sylva said findings by government showed that the CNG cost less than the subsidised PMS and that once the CNG was fully deployed, the price of fuel would crash. We are optimistic that both the Petroleum Industry Governance Administration and Host Communities Bill, on the one hand, and the Petroleum Industry Fiscal Bill, on the other hand, will be passed within the first anniversary of the second tenure of this administration.” Looking at the position of government as stated by the minister there is a lot of confusion going on in the minds of policy makers in Nigeria. What a shame.