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Unravel Oil Mystery Now: A Letter to Petroleum Minister, Bola Tinubu
Dear President Tinubu, permit me to congratulate you on the independence anniversary of our dear Nigeria or is it “independence anniversary celebration” (if there is anything to celebrate)? As so much water has passed under the bridge of the existence of our dear nation in the last 64 years, it is chief to remind you in a period like this on the need to halt the flow of further water into the bridge of the nation and to quickly end the current open sesame between Dangote Refinery and Nigerian National Petroleum Company Limited NNPCL that has brought the hardest hardship to Nigerians ever in history and under your watch. This is the intent of this letter but consent me your Excellency, to address you interchangeably as president and minister because you are both. That settled, let’s go on.
As the impasse between NNPCL and Dangote Refinery is a tragedy that should not befall any nation, it can best be likened to the proverbial man with a headgear but without a head. As a man with a headgear but without a head is seen to be nastiest than a man with a head but without a headgear, Africans believe that while the later in his continuous earthly adventure may someday encounter fortune and get a befitting cap for his head, the former with the absence of head requires divine intervention in addition to creative miracle to make a thousand headgears count. I am not by this saying Nigeria is headless but rather a quest to know why many headgears God has blessed us with have become more of curses.
Dear President Tinubu, as I wrote in an earlier article that the discovery of Oil at Oloibiri Delta State in 1956 has become more of a curse to Nigeria, it is sad that year in year out, the curses Nigeria gets from the blessing of being endowed with oil keep escalating because of the kleptomania leaders without compunction the nation has been blessed with. It is now a case of the more we go the bad or tough it becomes. As you know that one of the troubles that ravaged the country for so long from the blessing of oil was the Niger Delta uprising which was aimed at emancipating Niger Delta Region from the negligence of Nigerian government and some oil industries like Shell whose reckless approach to oil spills in the region brought about failed development interference by government. How do I mean?
According to World Bank estimate, the 70,000sqkm Niger Delta which is one of the largest wetland areas in the world with frail ecology, contributed about US$320 billion crude oil export to Nigerian economy between 1970 and 2000 but received no substantial benefits vis-a-vis social services such as infrastructural development and the overall welfare development of the people of the area. As a result of the impact of the environmental degradation which brought about sharp decline in both farming and fishing output over many years with other neglects suffered by the region, the restiveness it resulted into by the impoverished locals coiled out of control and became a serious wahala to Nigeria’s oil production when Obasanjo became president in 1999. But thanks to Umaru Musa Yar’Adua who through his instrument of Presidential Amnesty Programme ended the era of restiveness in the region and brought about restoration of peace.
Mr President, as the crisis which impinged on the operations of the International Oil Company (IOC) brought low output of about 380 barrel per day as against the then potential of about 3.2 million barrel per day was technically abated, Nigerians expected a sigh of relief and maximum benefit from oil but unfortunately, corruption which is another round of epidemic beclouds the sector through our refineries, particularly via what is called turnaround maintenance contracts by various Group Managing Directors (GMDs) of the Nigerian National Petroleum Corporation (NNPC) and now Nigerian National Petroleum Company Limited (NNPCL)
By way of reminding you Sir, in line with global best practices where refineries undergo regular maintenance for optimal performance, Dr Godswill Ihetu, a retired Group Executive Director of NNPC (Engineering and Technology), revealed in a chat with Punch Newspaper on 12th April 2021 that NNPC had a system put in place by corporate management that mandated each refinery to undergo turnaround maintenance every 18 months. This process he explained, was efficiently executed at corporate management level without the involvement of the Presidency till 1996 when presidential involvement slow down the process because of lack of provision of fund. This according to him was the genesis of the myriads of problems that now bedeviled our refineries.
As findings reveal Sir, there is no Group Managing Director of our dear NNPC that has been able to fulfill the promise of rehabilitating any of the country’s refineries since 1993 in spite of the humongous amount being released on turnaround maintenance. Despite the difficulty to getting the accurate expenditure on turnaround maintenance for many years, a report by Premium Times of 30th July, 2019 disclosed that the corporation (NNPCL) may have spent about $6.065 billion between 1993 and 2016 on the rehabilitation of refineries.
Breaking it down, NNPC spent about $308 million to repair refineries during the era of Chamberlin Oyibo as GMD between 1993 and 1995 and Dalhatu Bayero between 1995 and 1999. Coming to the fourth republic under the leadership of Gaius Obaseki (1999-2003) and Funsho Kupolokun (2003-2007) as GMDs, the report shows that about $2.06 billion was said to have been spent on the same purpose despite the claim of the 1999-2004 report of the Nigerian Extractive Industries Transparency Initiative (NEITI) that government did not release money for turnaround maintenance between 2002 and 2004.
Still on the report, succeeding Funsho Kupolokun as GMD, Abubakar Yar’adua shut down all our refineries for all-inclusive turnaround maintenance between 2008 and 2010 immediately after President Umaru Yar’adua revoked the sale of Kaduna and Port Harcourt refineries to Bluestar Consortium. Unfortunately, nothing was achieved by Abubakar after spending about $57 million on the failed exercise. This jamboree of wastage continued with Mohammed Barkindo between 2009 and 2010 who was not afraid to say publicly that $20 million was spent for turnaround maintenance on Kaduna refinery alone out of the $200million voted for all the refineries in that regard. We must also not forget in a hurry the tenure of Austen Oniwon which gulped about $900 million for rehabilitation of all the refineries between 2010 and 2012 and of course his successor, Andrew Yakubu between 2012 and 2014. Dear Tinubu, in 2013 alone, Yakubu as GMD of NNPC was said to have spent about $1.6 billion on rehabilitation with no result to show for it. But then, the looting carnival continued.
As it is said that a woman will always do better what a man can do, I am sure you as well as many Nigerians would still remember with absolute clarity, Diezani Alison-Madueke, our delectable former Minister of Petroleum Resources, the darling of Jonathan administration. She at a time shamefacedly revealed to Nigerians that about $32 million was spent on the purchase of materials for the repair of the refineries out of the N251 billion earmarked for turnaround maintenance. Yet, we waited in vain till she outlived her time and left the space for Ibe Kachikwu who also milked the nation from 2015 till his time was done in 2019.
Gallingly Mr President, upon the money expended on the various degrees of turnaround maintenance, Data from NNPC in 2019 shows that the old Port Harcourt Refinery has only gone through one major rehabilitation (1989) since its inception in 1965 while the new Port Harcourt Refinery which was founded in 1989 has undergone three stages of turnaround maintenance with the last one in 2000. The last maintenance on Warri Refinery was in 2004. If this revelation is anything to go by, many lovers of Nigeria are now questioning the destinations of the monies voted for the turnaround maintenance of all the refineries from 1993 till date?
Honourable Minister of Petroleum, the latest hocus-pocus that sets Nigeria on the current precipice of annihilation began more than a year ago the moment you released the bombshell “subsidy is gone” in the speech that marked your ascension into the exalted office of the President of the Federal Republic of Nigeria. Trust Nigerians, this instantaneously caused ripple effects across the land as our fuel stations without delay adjusted their pump prices of PMS, transport workers increased transport fares while food stuff prices never remain the same and everything in the land that money can buy. But that is not the meat of this piece but rather, the difficulty in extricating the current inscrutability and “mystery yet to be unraveled in the oil and energy sectors” as Nzeh Ezeocha, the Group Political Editor of Authority Newspaper puts. What are these mysteries?
After many decades of depending on imported refined fuel due to the failure of Nigerian government to making any of its refineries work that has left the economy battered, Nigerians had hoped that the arrival of Dangote into the energy sector and the construction of his 20 billion dollar refinery would end our energy affliction but unfortunately and suddenly, the attention of NNPCL was shamefacedly shifted to Dangote Refinery to the disadvantage of Nigerians. It all started when Dangote cried out that the Crude Oil Supply Regulation which NNPCL introduce to regulate the supply of crude oil to local refineries was a deliberate plan to limit the supply of crude oil to his refinery. Countering this, NNPCL through the head of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, challenged the quality of refined product in Dangote Refinery while Dangote after rebutting the claim also accused NNPCL of granting licenses to importers to bring dirty fuel into the country. These happened under your watch.
Under your taciturnity, was the blazing issue of supply of crude oil to Dangote Refinery where he wished to be given preference in the sale of crude oil from the soil of Nigeria which is in line with the Domestic Crude Supply Obligation (DCSO) of section 109 of the Petroleum Industry Act (PIA) which specifies that local refineries be given priority for crude sale before export. With the Organisation of Oil Exporting Countries (OPEC) putting the Crude oil produce in Nigeria at 1.35m bpd in its August 2024 report, NNPCL should by this arrangement, be able to supply Dangote’s 650,000 bpd capacity refinery with crude to help Nigerians without commotion.
Alternatively your Excellency, should NNPCL not able to fulfill this demand, oil majors can be compelled by your leadership to sell to Dangote at least till the current cup of hardship is taken over us but no, you were silent for too long. Now that you were forced to allow NNPCL to be supplying Dangote with 385, 000 bpd or so from October, I am glad to remind you that the long awaited October is here. Please do well to ensure that arrangement is not altered because we cannot have food at home and be complaining of hunger. Also, please oblige oil majors to supply Dangote with crude so he can make up with his crude domestic need without importation so as to cut some expenses associated with importation and force a reduction in price of PMS.
Honourable minister, another mystery that befuddled Nigerians under your ministry is pricing. This began when Dangote told Nigerians early in September that he was waiting for the Federal Government to determine the price of his product. Though this was rebuffed by your Special Adviser, Mr Bayo Onanuga but on 15th September, NNPCL asserted the purchase of petrol from Dangote at ₦898 per litre. Refuting this and refusing to tell Nigerians how much he sold it to NNPCL, Dangote said the price released by NNPCL included some additional cost such as profit margins and other expenses because according to him, his petrol is about 15% cheaper than imported alternatives. “How much did Dangote sell PMS to NNPCL and why has he refused to disclose this?” Nigerians deserve to know.
Also for your immediate intervention is the lifting of oil from the refinery. The idea of making NNPCL the sole lifter of oil from Dangote Refinery apart from nauseating, indirectly calls for monopoly in the sector. As energy security is defined as availability, accessibility and affordability of energy product and services, price of product is naturally brought down by pricing war between operators in the system. Therefore, fuel importers and marketers should be given the chance to patronize the refinery directly and not through NNPCL. If these marketers import fuel on their own without depending on NNPCL, why can’t they do so in their own soil if it is indeed cheaper than what they get from outside? It is therefore imperative on you to caution NNPCL on its part and direct importers and marketers to directly patronise Dangote Refinery so that the forces of supply and demand can take effect for the benefit of Nigerians.
As much as I hate talking about pricing Dangote product in dollars which is evidently not our currency, a school of thought has argued that since the refinery is in a free trade zone area, the IOC will apply International Crude Pricing Mechanism but your order in the wake of August #Endbadgovernance protest that crude should be sold to the refinery in naira is a clear evidence of the relativity of the position of this school of thought. This is a clear indication that things can be done better should there be genuine intention. We therefore plead for an end to playing politics with Nigerians.
Acknowledging the huge role and support of the Nigerian government to making the Dangote Refinery a success, as a minister and president, you are the only one that can end the hide and seek game between the two entities. Since there was a synergy between them that made the refinery a success, such understanding should be maintained this time. So, instead of giving NNPCL freedom of monopoly and thus unrestrained liberty to fix prices and make profit at the expense of energy security and Nigerians, let operators be allowed to trade so as to create competition that will booster supply and provide alternatives in term of pricing mechanism. After all, isn’t ours a free market economy? And as a Nigerian news columnist Majeed Dahiru puts, there is nowhere in the world where the mid and downstream sector of any oil industry is monopolized.
Just a year ago, your Security Adviser, Nuhu Ribadu, said that the country was losing about 400,000 barrels of oil per day to crude oil thieves and just in August this year, NNPCL reported the discovery of illegal connections on the pipelines and many other ugly discoveries. However, some groups of persons have also concluded that fuel prices will not go down anytime soon because of your several investments in the oil and gas sector. According to the story which states that: “Tinubu’s Agip Oil owns 17 oil wells in Niger-Delta region, and he also owns a refinery in Malta, managed by his sons,” I crave your indulgence to rise to the occasion and make life easy for Nigerians who are currently living from hand to mouth and dying from depression as a result of the economic hardship of your administration.
Your Excellency, If NNPCL is eager to preside over a refinery, use your position as the President of Nigeria and the Minister of Petroleum to revamp our refineries because it is sad that Nigeria cannot raise any of her refineries but want to lord it over another man’s refinery. Please use your position to break the back of the oil cartels that will not let our refinery work and write your name in gold because in addition to the benefits above according to Zacch Adedeji, the Executive Chairman of the Federal Internal Revenue Service (FIRS), there will be reduction in FX pressure if the sale of crude oil is done in local currency because as he puts, Nigeria spends about 30% and 40% of its FX on the importation of petrol which puts much pressure on the country’s foreign reserve.
Explaining further, this process will also enable Nigeria to save annually, the sum of $7.32 billion as well as stabilize the Pump Price of PMS, elimination of International Credit (ICL) and also reduce the expenses for both Dangote Refinery as well as the FX market.
Your Excellency, when you pour water (good or bad) on your head, it naturally trickles to other parts of the body. That is leadership, it is a chain reaction that must start from the top and every other part will catch up with it. Many Nigerians believe you know what to do and the wherewithal to do them. Do it and Nigerians will not forget you. If you refuse also, Nigeria will still not forget you. It only takes a real and genuine leader to change a nation. Please be the leader and do not allow individual cartels to hijack state agencies in order to advance their personal interest.
Please act now, your Excellency, Nigerians are waiting.
Olushola Omogbehin writes from Abuja FCT Nigeria
