Wobbling refineries: Arresting perennial wastage by re-channeling funds into productive alternatives
Oil and gas has since its discovery and exploration from the 1970s remained Nigeria’s economic honey pot. Several reservations on the productive state of the sector however, combine to make the discourse of the sector’s working profile a controversial subject. The productivity of the sector to the local economy appears to be skewed towards the lines of infantile state of reckon, as the forward and backward lines of productivity is glaringly at the precipice of lowering misfortune. While there are issues of concern on the upstream, matters relating to the downstream are much enmeshed in deforming characters which largely speak of the reality of a static, or better still, creeping subsector.
The subject of refining petroleum resources in the Country has been a major matter which over the years remains unaddressed. The idea of exploring crude in the Country with a forward sale to buyers abroad with the Country still going forward to re-purchase refined products for import back into the Country, has apparently been perceived as nothing less than a paradox. It is observable that while resources have continually been expended on refineries in the Country, the productivity profile of these facilities have been wobbling and ridiculous with rising and falling records. It is, therefore, lamentable that continuous release of funds to rehabilitate and service these facilities can more or less be described as a waste of resources. It is rationally inconceivable that the huge funds directed into managing these facilities have not resulted into any appreciable outcome.
It has been disclosed that the National Petroleum Investment Management Services (NAPIMS) a subsidiary of the Nigerian National Petroleum Corporation, NNPC, had expended no less N21.47 billion to rehabilitate the Country’s refineries, the Nigeria-Morocco gas pipeline and oil search in the frontier basins, among others in January 2021. The disclosure which came to bear in the NAPIMS February 2021 presentation to the Federation Account Allocation Committee (FAAC) revealed that the National Domestic Gas Devt.; Gas Infrastructure Development; Renewable Energy Development, RED; Crude Oil Pre-Export Inspection Agency Expenses and pre-export financing are some other projects funded during the period. According to the report, in January 2021, rehabilitation of the refineries alone gulped N8.33 billion. Other expenses included pre-export financing which received N5 billion; National Domestic Gas Devt. – N3.17 billion; and Gas Infrastructure Devt.- N2.39 billion. It was also disclosed that the Frontier Exploration Services, which also involves the search for hydrocarbons in inland basins, especially in the north, received N1.96 billion funding from NAPIMS; Crude Oil Pre-Export Inspection Agency Expenses and pre-export financing, NESS-FESS received N402.69 million; Renewable Energy Development financing gulped N119.83 million while N83.33 million financing was provided for the Nigeria-Morocco pipeline. It would be recalled that NAPIMS had in December, 2020 disclosed that it spent a total of N20.23bn on these projects, with N8.33bn spent on the rehabilitation of the country’s refineries; N4.19bn and N3.17bn spent on National Domestic Gas Devt.; Gas Infrastructure Devt. respectively; while N2.47 bn and N2.08bn were spent on pre-export financing and Frontier Exploration Services respectively.
The fact that the Country’s economy is bleeding is not contestable. All indices glaringly show that the state of the economy is headed to the precipice amidst recent realities. The fact that the Country cannot keep at the culture of unproductive expenditures if the issues surrounding the wobbling state of the economy would be address, is much perceivable in sight. The seeming misappropriation of resources to infrastructures that appear irredeemably unproductive is economically irrational. While the refineries in the Country have continued to underperform despite the huge amount of resources allocated for its rehabilitation, it is conceivable enough that the need for the Government to be sensitive to look for the best productive alternative should rather be brought to bear than the continuous pumping of funds into refineries which have continued to fail.
The low productivity of the refineries being not in any way near the demands of the local economy, is strong enough for the Government to look forward into creative ways to address the issue of the deficit. The huge infrastructure deficit in the oil sector calls for attention. The tardy approach of government institutions to these needs is worrying. The time to blend rationalisation with frugal principles in expenditures for projects with profound potentials to redeem the economy is sine qua non. It is essential for the Government to pragmatically trail the line of prudently channeling resources into grandeur projects with strong strings to pulling the economy out of depression. It is therefore imperative that redirecting, of course, be made to refocus the earmarking of funds to unproductive overheads, to capital projects which in the short and long run hold great potentials of outcome towards revitalising the Country’s economy at large. Thus, re-channeling funds for the upkeep of unimpressive refineries to developing productive alternatives is key. While this may demand for more financial commitment, it will in the long run save the country from perennial wastage.
