Oil & Gas

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The federal government has succumbed to the pressure mounted by oil workers and shelves its plan to privatise the refineries

|  By Anayo Ezugwu  |  Jan. 20, 2014 @ 01:00 GMT

THE federal government appears to be in quandary over its proposed privatisation of the four refineries in the country due to the pressure from oil workers. The Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN and the Nigeria Union of Petroleum and Natural Gas Workers, NUPENG, had threatened in December to embark on strike in January if the government fails to rescind its decision to sell the refineries. The unions decision came in the wake of a statement which Diezani Alison-Madueke made in London, stating that the federal government would privatise the refineries.

Also the Bureau of Public Enterprises, BPE, on December 20, 2013, in a statement released by Chigbo Anichebe, head of public communications, BPE, said that President Goodluck Jonathan has approved the commencement of the privatisation of the nation’s four refineries by the BPE in accordance with the transformation agenda of the federal government, which seeks to catalyse and provide an enabling environment for the private sector to be the drivers of economic growth in the country.

He added that the president had raised a steering committee on the privatisation of the refineries. According to him, the minister of petroleum resources heads the committee while its members are, ministers of finance, power, labour, national planning, mines and steel development, justice and the chairman of the extractive subcommittee of the National Council on Privatisation, NCP. Other members are the special adviser to the vice president on economy, the group managing director of the Nigerian National Petroleum Corporation, NNPC, the director-general of BPE, the group executive director (Refineries) of the NNPC among others.

The idea of disrupting the economy so early in the year by oil workers clearly did not appeal to the government. Hence, the presidency on January 2, through Reuben Abati, special adviser to the president on media and publicity, said the President Goodluck Jonathan did not give approval for the refineries to be privatised. He, however, dismissed the threat by the oil and gas workers to embark on strike, insisting that if the reason for the proposed strike is the issue of the refineries, then the action should not take place. The government followed their denial by meeting with oil workers over the issue on January 7. Both Alison-Madueke and Emeka Nwogu attended the meeting which resolved to heed the oil workers advice. Hence, the unions called off their planned strike action.

Prior to their decision, Babatunde Ogun, president PENGASSEN, said that the planned privatisation was an attempt to hand over the nation’s refineries to cronies of the federal government. “Government deliberately underfunded the refineries and refused to carry out turnaround maintenance just to have reasons for selling them off to their cronies. Instead of outright sale of the plants, government should adopt a modified process. Government should put measures in place to tackle the problem of pipelines vandalism, which hampers effective supply of crude oil to the refineries. The proposed sale of the refineries is against the overall national interest but in the interest of a few. Selling the plants is not the solution to importation of refined petroleum products but building more refineries to meet the demand of local consumption and for export trade,” he said.

Despite the opposition of oil workers, independent marketers in the country have supported the move by the federal government to privatise the refineries, saying it is a step in the right direction. Tunji Adedeji, former national president, Independent Petroleum Marketers Association of Nigeria, IPMAN, has advised the government not to stop its plans to sell the refineries despite opposition from the unions,  stressing the urgent need for the plants to be privatised to increase productivity in the sector. “I am in support of government’s plan to privatise the refineries by selling those plants to private investors who have the technical-know-how and effective managerial structure to run them for optimum production as well as revenue generation for the economy.   Privatising the refineries will serve the country better in export of refined petroleum products and beyond. Aside from selling the existing plants, private investors must also be encouraged to build refineries across Nigeria. Doing so will create more jobs for the citizens, especially the youths,” he said.

Similarly, Obafemi Olawore, executive secretary, Major Oil Marketers Association of Nigeria, MOMAN, has also advised government to ensure that the sale of the nation’s refineries is transparent and must follow due process in order to achieve the intended purpose. “I am supporting the initiative of government to privatise the refineries but it must be done through open competitive international bidding process and not by selection of friends or patronage. This is the only way to ensure efficiency in the system. Government’s plan is a welcome development and must be supported, because privatising the plants will bring about a complete change of ownership, which in turn will reduce corruption in the system. Selling the plants to private firms will further ensure faster implementation of turnaround maintenance and higher production capacity than what obtains now. This is because plants managed by private investors who are also in business to improve their profit margin will be much more effective and efficient compared to government” owned enterprise, Olawore said.

According to him, a typical example can be seen in the Eleme Petrochemicals Company Limited, EPCL, formerly owned by government. He said the privatised company has been raised from comatose to a very profitable and optimum production level. “The interesting thing is that the same staff who were there when government was in control and the plant was incurring losses are the same set of workers who are doing the turnaround maintenance and running the plant efficiently now. So, it is quite obvious that privatisation is the simply the solution”.

Realnews investigations gathered that a presidential audit of the facilities conducted last year recommended the sale of the plants because of inadequate funding from the government as well as sub-optimal production capacity of the plants over the years while under government’s control. Also, the report submitted to President Jonathan in November 2012 emphasised the need for the refineries with a combined 445,000 barrel-a-day production capacity to be privatised within 18 months.

This is not the first time the federal government is proposing to sale the refineries, an attempt was made to sale the refineries during the administration of Olusegun Obasanjo, former president, but the decision was reversed by his successor, the late President Umaru Yar’adua.

Tags: Babatunde Ogun BPE Bureau of Public Enterprises Chigbo Anichebe Diezani Alison-Madueke Independent Petroleum Marketers Association of Nigeria Major Oil Marketers Association of Nigeria National Council on Privatisation Nigeria Union of Petroleum and Natural Gas Workers Nigerian National Petroleum Corporation NNPC NUPENG Obafemi Olawore Olusegun Obasanjo PENGASSAN Petroleum and Natural Gas Senior Staff Association of Nigeria Reuben Abati Tunji Adedeji

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