Nigeria Spends N264bn on Refineries, Pipelines Annually, Says Ex-NNPC Chief

•Marketers to rally FG, stakeholders to achieve 18 months subsidy removal target

•Analyst warns government against tampering with PIA

Peter Uzoho

The inefficiencies associated with the four inactive refineries and decrepit petroleum pipelines and depots belonging to the Nigerian National Petroleum Company Limited (NNPC) cost Nigeria over N264 billion annually

A former Chief Operating Officer (Upstream) of former Nigerian National Petroleum Corporation and Chairman of Dankiri Farms & Commodities, Mr. Bello Rabiu, disclosed this in Lagos, yesterday.

He said the country spends over N22 billion every month on these dilapidated assets.

Rabiu spoke just as petroleum products marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) have indicated their readiness to continue to discuss and collaborate with the federal government and relevant stakeholders in order to achieve the 18-month timeline for subsidy removal.

On the other hand, an economic policy analyst and Chief Consultant at B.Adedipe Associates, Dr. Biodun Adedipe, has advised the federal government against tampering with the Petroleum Industry Act (PIA) in the name of tinkering with the deregulation provision in the Act.

They all spoke at a workshop organised by MOMAN for energy correspondents, with special focus on the recent developments on subsidy.

Delivering a paper entitled: “Challenges of Equitable Refining, Importation, Supply and Distribution of Premium Motor Spirit in Nigeria,” Rabiu stated, “Between N11 billion and N12 billion is spent on refineries every month as well as N12 billion spent on pipelines across the country.”

He wondered why the facilities would be left unmaintained and inactive while they gulp huge amount of money, arguing that only Dangote was building a refinery of huge refining capacity while government could not build new ones or maintain the ones it has.

“How many years does it take Dangote to put up his refineries that the government could not put the refineries together for 23 years? In fact, we should make this a key point of campaign for those seeming national offices,” he said.

Rabiu questioned the N9 per litre bridging cost being charged by the government to make the price of petrol equal across the country, saying it is not economic and does not add value, as it makes the subsidy to soar.

Speaking at the workshop, the Chairman of MOMAN, Mr. Olumide Adeosun, who read the marketers’ position on the deferment of subsidy removal, said they would continue to engage the government and critical stakeholders in order to ensure that the 18-month timeline given for the implementation of deregulation was achieved.

Adeosun said the Minister of State for Petroleum Resources, Chief Timipre Sylva, had met with MOMAN over issues around the planned N3 trillion annual subsidy payment as well as the shift in the implementation of the end of fuel subsidy.

He said his group was seeking further engagement with Sylva and other top government functionaries to understand exactly how the subsidy decision would impact the other provisions in the PIA as well as market operations.

Adeosun said, “The Major Oil Marketers Association of Nigeria have been approached by members of the press seeking its reaction with respect to the suspension of subsidy removal.

“The members of the Association are currently seeking to consult with the Ministry of Petroleum Resources, the Nigerian Midstream and Downstream Petroleum Regulatory Authority and other industry stakeholders to understand exactly how this decision would impact the other provisions in the Petroleum Industry Act as well as market operations.

“Recall, that the reforms contained in the PIA are a combination of several decades of engagement with internal and external stakeholders, capturing local and international best practices to encourage investments in the petroleum downstream sector, optimise costs, ensure transparency, and upgrade industry assets and infrastructure (refineries, depots, pipelines, trucks, and filling stations).

“The decision having been taken to suspend subsidy removal, the direction of our consultation necessarily would be towards understanding and contributing towards what market philosophy and regulations should be in place during the 18-month period to ensure uninterrupted supply, transparency.

“This will be in line with long-term objectives for the administration and growth of the industry.

“Once clarity has been achieved, we shall address a press conference on the issue.”

In his presentation, Adedipe, whose paper was titled: “Economics of Subsidy and the Pathway to Achieving Industry Reforms in the Petroleum Downstream Industry,” advised the federal government not to tamper with the PIA in the name of changing the provision for deregulation.

He said government could instead revise the budget and amend the 2022 Finance Act to fit into what it wanted.

He said tampering with the Act might create more problems and send wrong signals to investors.

The economist however pointed out that subsidising consumption was not a good economic decision for any nation, saying subsidy only adds value to an economy when it was targeted to the manufacturing sector.