NNPC in need for more competition

Feb 18, 2002 01:00 AM

The uncharted course of the Nigerian privatisation programme generally and the avoidances over issues regarding the downstream segment of the oil sector appear to be getting more curious, each passing day, with the government and its agencies exhibiting indecision at all stages.
In this regard, while the dust raised by the New Year day hike in petroleum products prices is yet to fully settle, the NNPC whose evident inefficiency was widely canvassed as reason for the price adjustments, is now angling to still hold on to aspects of key activities in the oil and gas business. Rather than the outright privatisation of the nation's four oil refineries whose fitful operations partly contributed to the country's energy crisis in recent times, the NNPC is pushing to retain control of at least two of them.

Two of the refineries are located in Port Harcourt, Rivers State, one in Warri, Delta State and the other in Kaduna. The Bureau of Public Enterprises (BPE) charged with overseeing the privatisationprocess had, last month listed the four refineries for sale. However, in its latest move, the NNPC wants to run two of the refineries, particularly the ones in Port Harcourt "in a more competitive manner that will nonetheless keep the ownership in the hands of the state."
Given the antecedents of the NNPC and the seemingly dire state of the refineries over the years, the move by the corporation this time around is at best an effort to remain relevant in the face of fast changing circumstances in the oil industry. For too long, the NNPC has enjoyed untainted monopoly in almost all aspects of the oil business and truly, inefficiency and disappointment have remained the hallmark of its services to the nation.

Which is why even though the four refineries have combined capacity of about 450,000 bpd, they have never produced even a third of this volume at any point in time; in consequence, Nigerians have been going from one season of fuel scarcity to another for the past couple of decades. In fairness to theNNPC therefore, the best option is for it to shed as much weight as possible through the privatisation exercise and thus become trim, to function effectively as an unbiased umpire in the very sensitive oil business.
As it were, the NNPC itself should be a candidate for privatisation, rather than being left to continue to infect the industry with the contagion of lethargy and inefficiency. It is already a national shame that petroleum products importation has become fashionable in a country so richly endowed with natural oil and gas.

And the NNPC, the chief advocate for the importation is now secretly turning round to fool Nigerians into believing that it has suddenly discovered the magic wand with which to run two of the refineries efficiently. The nation has been fed with this deceit for too long; the earlier the NNPC hands-off the refineries to allow capable private operators to run them, the better for all stakeholders in the downstream oil sector.
Even the touted entry of the NNPC into the construction and running of petrol stations in certain cities in the country is quite portentous. Whether through third parties or directly, the role of the NNPC is bound to stall, rather than enhance, the objective of efficient supply and distribution of petroleum products to all corners of the country.

The point therefore needs to be re-stated that Nigeria's wheel of meaningful economic development has been slowed down by the failings of the NNPC and other agencies like it; sticking to the old order is tantamount to perpetual economic weakness in a globalising world. Let all refineries go to private hands, and let the NNPC adjust to new realities. This is the only way forward in the oil sector.

Source: The Guardian
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