PENGASSAN is missing the point about selling unproductive refineries

Yesterday, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) attacked the suggestion made by the Independent Petroleum Marketers Association of Nigeria (IPMAN) over the fate of Nigeria’s refineries. Members of PENGASSAN stated that the proposal made by IPMAN was fraudulent and could cause the country to lose even more assets this year. Comrade Emmanuel Ojugbana, Public Relations Officer for PENGASSAN termed the move a “sabotage against national interest.”

According to him, the Minister of State for Petroleum Resources, Mr. Kachikwu Ibe, recently reported that the refineries were in good form and would commence production this year. In December 2015, Kachikwu stated that the refineries would run effectively within the space of a year to provide affordable oil products for the country.

In addition, Ojugbana asked Nigerians to question the motive of IPMAN’s leaders, after reports from the government show that the refineries can potentially provide up to 75 percent of Nigeria’s local demand for refined oil products.

The National Operation Controller of IPMAN, Mr. Mike Osatuyi, advised the Federal Government last month to sell off any of the refineries that could not be revived. He made the statement in relation to disclosing the FG’s plans to partner with the association on an intervention scheme for petrol (Premium Motor Spirit).

One major reason for the Controller’s suggestion is the fact that with only four days left in the 90-day ultimatum given by Kachikwu for the country’s four refineries to resume production, only the one in Kaduna has recorded a positive response. As he sees it, some of the refineries may be beyond redemption and it is more cost-effective for the government to let them go and focus on other viable outlets.

For example, Dangote’s refinery is poised to have a 600,000 barrel per day (bpd) output by 2018, which is more than the capacity recorded by the total sum of the four refineries currently in operation at 445,000 bpd. Another reason why holding on to non-functioning refineries is a waste of time.

Also, he stressed on why the government should seriously consider deregulation of the downstream oil and gas industry if it hoped to eliminate the issue of fuel scarcity and long queues at filling stations. To back his point, he mentioned how the intervention scheme is already responsible for the reduction of fuel scarcity by giving IPMAN members fuel on credit and how this can be maintained if the government carries out positive action.

This is not the first time the Federal Government has been adviced to either sell off non-functioning refineries, or privatise them. In January 2015, IPMAN noted that the government would do well to leave the running of refineries to the private sector and simply focus on providing a conducive – legal – atmosphere for them to operate within.

While PENGASSAN is not necessarily against the idea of deregulation, it believes that the national refineries are still viable and profitable and management by the government is the least of the problems that they face.

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