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Should FG privatise or rehabilitate refineries?

  • Professor Akpan Ekpo (Director General, West African Institute for Financial and Economic Management)

On the issue of the refineries, the government should commercialise rather than privatise. This means that the government would still own substantial equities, but allow private individuals to manage the refineries.

The government will still own a large percentage of the shares. We cannot just sell the refineries off to private individuals. The management of the refineries will be given to competent hands, but the ownership will still rest with the government.

The government should limit how much can be bought of the refineries. Commercialisation, rather than privatisation, means that when critical decisions concerning the refineries are to be made, the Federal Government and Nigerians will both sit at a table.

  • Francis Johnson (National President, Petroleum and Natural Gas Senior Staff Association of Nigeria)

On the privatisation of refineries, the major issue with these refineries is that the turnaround maintenance is not being done as and when due. The refineries have always been there and if they had been maintained, we will not be at the stage we are now.

What the refineries need is rehabilitation. If we also want to look at improving the state of our refineries, we can use the Nigerian Liquefied Natural Gas model. The model talks about partnership. It is unfortunate that the economy is in a bad shape and we are talking of selling off our national assets.

That is not proper. What we can have is a partnership. If our refineries are rehabilitated and are working well, Nigeria is going to have less importation of crude. For example, the Port Harcourt refinery has a major problem which is power. The Port Harcourt refinery’s power plants need to be fixed. For the refineries in Warri, Delta State, and Kaduna State, there is the problem of pipeline leakages between them.

If these problems are addressed, there won’t be any reason for privatisation. It is our financial situation that is making us think of privatisation. We also have to fix the problem of vandalism. If some people are destroying the pipelines and the government is spending money on fixing those pipelines, that is not good enough.

The rehabilitation of our refineries will generate revenues for the government. But if privatisation is done, we will then begin to look at labour issues. To make our refineries work effectively, the government may only have to embrace partnership.

Look at the Oodua Group set up by the late sage, Chief Obafemi Awolowo, in the South-West, it is still in existence. The state governments are striving to see that the heritage is preserved. Most of these refineries were built many years ago.We have to rehabilitate and not sell them off.

  • Comrade Bobboi Kaigama (President, Trade Union Congress)

We cannot go along the line of privatisation of our refineries because that amounts to selling off our strategic assets. In most parts of the world, national oil companies are being controlled by the government because they are in a strategic sector. All that is needed is to make the sector effective.

The refineries were very functional before and we need to bring that functionality back. We need to have corporate governance principles in place. What kind of privatisation are we talking about? We have seen some past policies on privatisation and out of a 100 per cent done, not up to 30 per cent was functional?

The refineries can sustain themselves and the government should give them turnaround maintenance. They should give the refineries to competent hands and ensure that corporate governance principles are involved in the management. This is what will make them functional government assets.

We do not expect the government to go on with privatisation without engaging the critical stakeholders. And if that happens, we will kick against it.

  • Mr. Idowu Adelakun (Chairman, Nigeria Labour Congress, Lagos State)

I advise the Federal Government not to privatise our refineries. They should rather repair the existing refineries and even build new ones to cater to the needs of the country. Rehabilitation is better than privatisation.

The advantages of rehabilitation of refineries are many to the masses. Up till now, the country does not know how much we use to produce a litre of fuel. This is why we have been having frequent increases in pump price. Nobody has come out to say this is the amount used in refining a litre of fuel. This is why all the fuss about privatisation will not pay off.

Since we do not know, privatisation then cannot be the solution. Let’s take a look at the power sector, which was privatised. It does not mean that electricity has improved in the country. That is why the NLC is opposed to privatisation. The so-called private hands coming to take over the refineries do not have enough resources to manage this key sector. They are only after acquiring the public property.

  • Mr. Tokunbo Korodo (Chairman, Nigerian Union of Petroleum and Natural Gas Workers, Lagos State)

Any policy of government that will lead to job losses should not be supported. You will notice that some of the multinational oil companies are winding down and this is leading to more job losses. Over 3,000 workers have lost their jobs recently. This is why we need more government intervention at this time. NUPENG does not support selling of public property.

If at all they want to have a little shift from taking sole responsibility, there should rather be a partnership. This partnership will bring results and the refineries will be rehabilitated and competent hands can be brought in to manage them.

We stand against selling off of the refineries. The government should allow partnership with a view to rehabilitating and managing our refineries. We may shift away from the government’s domineering position. But these refineries are our heritage and privatising them will lead to job losses.

That should not be allowed to happen.

  • Professor Leo Ukpong (Department of Financial Economics, University of Uyo)

In terms of pure market-driven system, privatisation is the way to go. However, for the sake of Nigeria, where government controls the input, which is the crude oil, there is a need for rehabilitation, which is also what obtains in most countries in the Organisation of Petroleum Exporting Countries.

The Federal Government controls the input, and so, privatisation will not be possible. The right thing to do is to help the industrialists, the private sector and the consumers of fuel by rehabilitating the refineries. The government should let the price of fuel be driven by the cost of crude.

It is also what obtains in other OPEC countries. In case of privatisation, there is the possibility of raising the price of fuel, if there are not government regulatory agencies.

If the crude is selling for $50 per barrel, and if we are producing the fuel, it will mean we have to buy at a lesser price, which is what the consumers will be satisfied with. The price of crude in Nigeria should be below what obtains in the international market.

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