Economics

FG drops planned refinery projects •Jonathan must tackle fuel subsidy corruption–Labour

President-Goodluck-Jonathan1-360x225Eleven months after promising to build three new refineries for the country, the Federal Government may have dumped the plan.

Saturday PUNCH investigations showed that the FG may have dropped the idea because of the unresolved issue of deregulation of the downstream sector of the petroleum industry.

This development came to the fore as organised labour expressed surprise at President Goodluck Jonathan’s N161bn supplementary budget on fuel subsidy for 2012.

The labour body advised the President to tackle corruption in the oil sector.

The President had in a letter to the National Assembly on Tuesday, said the N888bn budgeted for fuel subsidy this year would not be enough.

But as Jonathan is seeking an additional N161bn, the FG has yet to begin moves to build the three refineries it promised during the fuel subsidy protests last January.

The Nigerian National Petroleum Corporation had in 2010 unfolded plans to build three new refineries.

The refineries are to be sited in Kogi, Lagos and Bayelsa states.

The NNPC Group Executive Director, Engineering and Technology, Mr.  Billy Agha, who stood in then for the Group Managing Director in Yenagoa, Bayelsa State, had said 7,000 job opportunities would be created by the Greenfield Refinery that would be built in the state by the corporation in partnership with the China State Construction Engineering Corporation.

Again in 2012, at the height of the fuel subsidy protests, the Federal Government said it would build three refineries. 

The Minister of Works, Mr. Mike Onolememen, who spoke to douse the tension associated with the protests, had said, “I want Nigerians to know that when these new refineries are completed, we will be a net exporter of petroleum products and prices will begin to come down, just as we are witnessing in the telecommunications sector with the GSM regime.

“That is my message to Nigerians. Let us support the government. Let us join hands with the government because it cannot and will not take any decision with the aim of punishing fellow Nigerians. It is impossible. So, Nigerians should have this at the back of their minds.

“The one in Lagos is with the capacity of 200,000 barrels per day, while the ones in Kogi and Bayelsa have the capacity to produce 100,000 barrels per day.”  

Investigations at the NNPC showed that 11 months after the government promised to build the three refineries, not much has been done to that effect.

A top official of the corporation told one of our correspondents that the three refineries were supposed to be part of the government’s effort to stop fuel importation.

He said, “The three refineries are to be built by the government in partnership with the private sector. They do not include the six that are solely private sector driven.

“But from all indications, the government has developed cold feet and the six by the private sector seem to be still-birth. There are various stakeholders who prefer fuel importation. These are the people that will not allow the plan to build refineries to succeed.”

President Goodluck Jonathan had said that private investors were not interested in building refineries in the country because of the fuel subsidy regime.

He had said, “Why is it that people are not building refineries in Nigeria despite the fact that it is big business? It is because of the policy of subsidy, and that is why we want to get out of it. Who will build refineries and end importation of petroleum products? Subsidy must go.”

The President had spoken in Abuja when he received the report of the graduating participants of the Senior Executive Course 34, 2012 of the National Institute of Policy and Strategic Studies.

  Efforts to get NNPC’s comment on the status of the three refineries did not succeed.

Attempts to speak with the acting General Manager, Public Affairs at NNPC, Mr. Fidel Pepple, proved abortive as calls to his cell-phone did not go through. It was learnt that he was out of the country.  

Similarly, attempts to speak with the General Manager, Media, Dr. Ibrahim Umar, were unsuccessful. He neither picked calls to his cell-phone nor replied a text on the status of the refineries.

Commenting on the failure of the government to build the three refineries, the President of the Trade Union Congress, Mr. Peter Esele, said the President should fulfil his promise.

He stated, “The people involved are just waiting for some form of assurance to take off. The President should take that step to commence action on it.

“He has made a promise, those people want to do it, but they want a guarantee from the government. It is important for the President to give them this before they start. It is incumbent on the President to break the ground for those refineries to be built. This thing has to do with credibility.”

He expressed surprise over the N161bn supplementary budget on fuel subsidy the President submitted to the National Assembly.  

Esele said that there was the need to address the corruption in the fuel subsidy regime.

According to him, based on the increase in the pump price of fuel by 60 per cent in January, the amount spent on fuel subsidy should have reduced.

He said, “The thing came to me as a surprise because the pump price was increased by 60 per cent in January. When we had N1.7trn,   there was so much corruption in the system. And now that we are getting the corruption out of the system, the subsidy should come down drastically.

“At least, it should reduce by over N500bn. It is expected that pump price would have reduced. With this additional demand, there is the impression that there is still corruption in the management of the subsidy.”

On her part, the president of the Campaign for Democracy, Dr. Joe Okei-Odumakin, described the present government as profligate.

She said, “To spend N1trn on subsidy in a year at N32 per litre tax, which was imposed on petroleum, is the height of fiscal recklessness.

“No country that runs on this template can make a progress.”

The Petroleum and Natural Gas Senior Staff Association of Nigeria has also urged the FG to repair existing refineries and build new ones.

The group warned that import-driven deregulation would ruin the nation’s petroleum industry.

President of the association, Babatunde Ogun, said, “We call on the government to ensure that the existing refineries perform optimally and new ones are built within a specified time frame. It does not have to be giant refineries, but pockets of refineries across the country, especially in the oil-producing states.

“Similarly, operators in the upstream sector must be made to refine a specific percentage of their allocations locally.”

 

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