According to the minister, the current situation of net-importation by the region may remain unchanged in spite of current plans to develop new refineries to increase domestic production.
According to estimates, demand for petroleum products by African countries is expected to rise by 40 percent by 2020 from 3.5 million presently to 4 million bpd then. Mrs Alison-Madueke noted that several plans aimed at increasing local refining capacity by a number of African countries would be inadequate to stem the trend. What this projection calls for is a review of stalled plans to increase local refining capacity and enhance self-sufficiency in petroleum products in the future. But is the government willing to go down that road?
The projection for Nigeria is even more poignant, illustrating a disappointing outlook, because it misses out the real message that the minister should have focused on, which is that the government should be considering new initiatives to exploit the opportunities in the rising demand by sub-Saharan Africa. Indeed Mrs Alison-Madueke’s submission actually betrayed tacit complacence, or at best a lack of capacity, to respond to growth opportunities that abound in the region and in the management of the nation’s petroleum resources.
The huge market associated with the demand profile for Africa offers an attractive impetus for escalated supply-side activity by Nigeria’s internal refining opportunities in order to maximize possible dividends from the nation’s oil sector operations. That expectation flows from the nation’s endowments in oil resources and its potential for enhanced participation in the sector at the continental level.
The scope of Nigeria’s aspirations towards optimal participation in refining crude oil spans the demand of non-oil producing African states. However, its infrastructure in that respect falls far below expectations, despite years of pledges and expenditures, with practically nothing to show in return. Against a domestic crude oil production of 2.4 million barrels per day, the nation’s installed refining capacity is only 450,000 barrels/day from existing three refineries in Port Harcourt, Kaduna and Warri. However, since their average production is only 30% of installed capacity, they are unable to meet domestic demand, even though many rounds of turnaround maintenance have been undertaken at huge cost to make them operate above that level. Despite committing such resources, Nigeria remains a net importer of refined products, a disgracefully unenviable position to be in for a major oil exporter.
Moreover, the task of increasing the domestic refining capacity is bedevilled by a complement of policy twists, corruption and the absence of political will to fix what is glaringly wrong. Some years ago, the country granted refining licences to 18 private companies. Of these, only the Dangote Group has stepped up to the plate to start one. Later, the Greenfield refinery project was launched under a collaborative deal between the NNPC and the Commercial Bank of China. So far that initiative has yielded no tangible benefits.
This is an untenable situation that needs to be turned around, especially in the face of the huge market ready for exploitation by Nigeria on the African continent. The minister should be re-strategizing to tap into that market and end Nigeria’s dependence on imported refined petroleum products in less than two years, not reminding the public of government’s inability-or unwillingness-to act proactively.
Reservations over the management of the nation’s oil resources draws from the perennial failure of the sector to exploit market opportunities in the downstream for growth. All along, the strategy was designed to emphasis export. Now that the export programme has plummeted following the cut in import of Nigeria’s sweet crude by several countries, including former principal buyer the United States, the paradigm now favours a shift to boosting domestic production. And the time to act, not lament, is now.