Why NNPC wants to privatize Nigeria’s refineries

Barely a week after announcing the removal of fuel subsidy, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has said the corporation will no longer be involved in the management of the nation’s refineries after their rehabilitation.

A statement by the Spokesperson of NNPC, Dr. Kennie Obateru, said Kyari, who made the disclosure on Wednesday in an interview on Arise TV breakfast programme, The Morning Show, disclosed that upon completion of the ongoing rehabilitation of the refineries, the services of a company world be procured to manage the plants on an operations and maintenance(O&M) basis.

“We are going to get an O&M contract, NNPC won’t run it. We are going to get a firm that will guarantee that this plant would run for some time. We want to try a different model of getting this refinery to run. And we are going to apply this process for the running of the other two refineries”, he stated.

He explained that the plan, ultimately, is to get private partners to invest in the refineries and get them to run on the NLNG model where the shareholders would be free to decide the fate of the refineries going forward.

He stated that this model, which is totally different from previous approach, would guarantee the desired outcome for the refineries.

Earlier in another Programme on a Channels TV breakfast talk show, Sunrise Daily, Kyari said the decision to finally end the fuel subsidy regime is in the interest of ordinary Nigerians as it would free up funds for the various tiers of government to develop basic infrastructure in the education, health, transport, and other sectors for their benefit.

“Subsidy is elitist because it is the elites that benefit from it. They are the ones that have SUVs, four, five cars in their garages. The masses should be the ones to benefit. There are many things wrong with the under-recovery because it makes us to supply more than is needed. This makes the under-recovery to be bloated because we unwittingly subsidize fuel for the whole of West Africa. That has to stop,” he said.

He explained that the removal of subsidy would automatically correct the distortions it created in the market such as products arbitrage and smuggling, stressing that it would also provide the needed impetus for the NNPC to establish retail outlets in neighbouring countries.

On the agitation in some quarters for a reduction in the price of kerosene, he said the corporation’s focus was rather on how to migrate all those who were still using kerosene for domestic cooking to the use of Liquefied Petroleum Gas (LPG) which is popularly referred to as cooking gas.

According to him, apart from LPG being a cheaper fuel than kerosene, it is also safer and more environment-friendly.

He said the Minister of State for Petroleum Resources, Chief Timipre Sylva, was championing policies to deepen the adoption of LPG for domestic consumption, adding that widespread adoption of LPG usage was the best solution to kerosene supply challenges in the long term.

On the situation with global crude oil price and supply, the GMD said things were shaping up.

“Crude oil price is improving by the day. Last week, it was $15 per barrel. Today, it is $32.79 per barrel. We believe the ongoing engagements between global oil producers will bring back demand and once that happens, the market will balance and fully recover by year-end”, he stated.

On the fight against the Covid-19 pandemic, Mallam Kyari who put the current total donations by players in the Oil and Gas Industry at N21 billion said the sector was obliged to support the Federal Government in its efforts to bring relief to Nigerians.

He maintained that the donations were in kind and were designed to address three key areas of: provision of hospital consumables (face masks, test kits, etc.); provision of support services and facilities for patients (beds, ventilators, etc.); and provision and upgrade of health infrastructure that will outlive the Covid-19 pandemic.

He said the strategic interventions of the Oil and Gas Industry towards the fight against the Covid-19 pandemic in Nigeria were aligned with the objectives of the Presidential Taskforce on Covid-19 headed by the Secretary to the Government of the Federation, Mr. Boss Mustapha.

(Credit: Akon ETUMUKWA)