Nigeria to Privatize State-Owned Refineries

Diezani Alison-Madueke, the Minister of Petroleum in the Federal Republic of Nigeria, has been interviewed in ThisDay newspaper. Nigeria is a large oil exporter in West Africa., a photo by Pan-African News Wire File Photos on Flickr.

Unanswered questions

Editorial From The Nation
Nigeria

•Oil minister’s news of sale of four refineries reflects a disingenuous government

It is difficult to understand exactly what the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, wants Nigerians to make of her recent disclosure that the country will commence the privatisation of its four state-owned ailing refineries in the first quarter of next year. Speaking in an interview with Bloomberg TV Africa in London, the minister said, “We would like to see major infrastructural entities such as refineries moving out of government hands into the private sector … Government does not want to be in the business of running major infrastructure entities and we haven’t done a very good job at it over all these years”.

Now, does Mrs. Alison-Madueke expect Nigerians to pat her on the back and applaud her ministry on this score? If so, she utterly underestimates the disenchantment and disgust of the public at the abysmal level of corruption and sheer criminality that have crippled the oil sector, particularly under her watch.

She seems to be oblivious of the fact that, even though this could be a step in the right direction, the privatisation of the refineries is only a minute part of the serious challenge of thoroughly overhauling the oil industry and transforming it into an effective vehicle for achieving national developmental objectives.

Given the near total dependence of the economy on crude oil exports, the level of laxity and lack of cohesion that characterise the management of Nigeria’s petroleum sector is unbelievable. Despite the eloquent lip service paid to the development of the non-oil sector, government seems pathetically incapable of weaning the country off oil addiction. That Nigeria relies on fuel imports to meet over 70 percent of her domestic needs, even though she is a leading producer of crude oil, illustrates the inexcusable absence of seriousness in the management of such a critical economic sector.

The announcement by Mrs. Alison-Madueke of the impending privatisation of the refineries raises a number of fundamental and pertinent questions. For instance, why should anyone be enthusiastic about this initiative since this is a path the country had charted before without success?

In the twilight of its tenure, the President Olusegun Obasanjo administration actually sold off the refineries to the private sector. However, that transaction was terminated by the Umaru Yar’Adua administration for alleged abuse of due process.

What guarantee do Nigerians have that the privatisation process this time around will be above board, since the management of the petroleum sector remains as graft-ridden and lacking in transparency as ever?

The paralysis of the country from the oil subsidy strikes was reversed on the promise that the proceeds will be used to restore the refineries while work would start on Greenfield Private Refineries. The Federal Government has fulfilled these only in the breach.

If not, why did the petroleum minister confidently assure the nation last year that the Turn Around Maintenance (TAM) being undertaken in the four refineries, coupled with the proposed three Greenfield Private refineries planned for Lagos, Kogi and Bayelsa states would substantially boost domestic refining capacity and end fuel imports by the end of this year?

If the plan all along had been to privatise the refineries since they cannot be effectively run by government, why waste scarce resources on a barren TAM? The impression is that the Jonathan administration conned the nation.

Even more seriously, the probe of the fuel subsidy management scheme last year revealed collusion by public and private sector operators in the oil industry to capitalise on fuel imports to engage in monumental graft through phantom subsidy payments.

The implication is that these criminal elements benefitted over the years from the dysfunctional state of the country’s refineries. Can these same tainted officials be trusted to oversee the much desired transformation of the oil industry?

In particular, does Mrs Alison-Madueke under whose watch much of the mind-boggling corruption occurred have the moral authority to supervise the sanitisation of the sector, including the privatisation of refineries?