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Wars looms over privatization of refineries

By on December 23, 2013

Crisis is brewing between the Federal Government and oil workers under the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and National Union of Petroleum and Natural Gas Workers (NUPENG) as the two unions have vowed to embark on a nation-wide strike following the move by government to privatise the nation’s four refineries in Kaduna, Port Harcourt and Warri by first quarter of 2014.

Speaking in Lagos, the PENGASSAN President, Comrade Babatunde , warned that the unions would go on strike by the first week of January 2014, if government goes ahead with the sale of  the four refineries to private investors.
His words: “Government deliberately under-funded the refineries and refused to carry out TAM just to have reasons for selling them off to their cronies.

Rather that outright sale of the plants, government should adopt a modified process tailored towards the Nigerian Liquified Natural Gas (NLNG) model with the National Oil Company (NOC) as owners of the four refineries, holding a substantial minority shares while core investors hold the working majority with the staff, trade unions, and the host communities holding minority shares.

“Government must put measures in place to tackle the problem of pipelines vandalism, which hampers effective supply of crude oil to the refineries. The proposed sale of the refineries is against the overall national interest but in the interest of a few. Selling the plants is not the solution to importation of refined petroleum products but building more refineries to meet the demand of local consumption and for export trade.”

Meanwhile, a former National President, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Tunji Adedeji, advised government not to back out of it plans to sell the refineries despite opposition from the unions,  stressing the urgent need for the plants to be privatised to increase productivity in the sector.

Adedeji told Sunday Vanguard at the weekend, “I am in support of government’s plan to privatise the refineries by selling those plants to private investors who have the technical-know-how and effective managerial structure to run them for optimum production as well as revenue generation for the economy.   Privatising the refineries will serve the country better in export of refined petroleum products and beyond.”

He continued, “Aside from selling the existing plants, private investors must also be encouraged to build refineries across Nigeria. Doing so will create more jobs for the citizens, especially the youths.”

In the same vein, the executive secretary, Major Oil Marketers Association of Nigeria (MOMAN), Mr. Obafemi Olawore, advised government to ensure that selling of the nation’s refineries is transparent and must follow due process in order to achieve the intended purpose.

He added, “I am supporting the initiative of government to privatise the refineries but it must be done through open competitive international bidding process and not by selection of friends or patronage. This is the only way to ensure efficiency in the system. Government’s plan is a welcome development and must be supported, because privatising the plants will bring about a complete change of ownership, which in turn will reduce corruption in the system.”

He enthused, “Selling the plants to private firms will further ensure faster implementation of Turn Around Maintenance (TAM) and higher production capacity than what obtains now. This is because plants managed by private investors who are also in business to improve their margin will be much more effective and efficient compared to government.

A typical example can be seen in Eleme Petrochemicals Company limited ((EPCL) formerly owned by government and now privatised has been raised from comatose plant to a very profitable and optimum production level. The interesting thing is that the same staff who were there when government was in control and the plant was incurring losses are the same set of workers who are doing TAM and running the plant efficiently now. So, it is quite obvious that privatisation is the simply the solution”.

Sunday Vanguard gathered that a presidential audit of the facilities conducted last year recommended sale of the plants mainly due to inadequate government funding as well as sub-optimal production capacity of the plants over the years while under government’s control. Also, the report submitted to President Goodluck Jonathan in November 2012 emphasized the need for the refineries with a combined 445,000 barrel-a-day production capacity to be privatised within 18 months.

 

 

 

[Vanguard]

One Comment

  1. Rico

    December 23, 2013 at 12:54 pm

    Those are very old and outdated refineries, anyone buying it will never increase productivity, they will use many years in upgrading it.