According to the Petroleum Products Pricing Regulatory Agency, the contribution of Nigerias four dilapidated and epileptic refineries to the national PMS/petrol consumption stands at between 4 per cent and 20 per cent, of which the total national daily consumption stands at 35 million litres daily, meaning that at least 28 million litres of petrol daily consumed in Nigeria is imported.In the November 2011 edition of Sweetcrude publication, the Group Executive Director, Refining and Petrochemicals, Nigerian National Petroleum Corporation, Phil Chukwu, in an extensive interview revealed the true state of our refineries and the structure of the downstream petroleum sector in Nigeria. He stressed that a lot of the problems associated with the refineries come with the availability of crude oil.According to Chukwu, "The Pipelines and Products Marketing Company buys the crude from government at international market price. It is PPMC that sends this crude to the refineries; the refineries process it for the PPMC, which takes its products and sends it to the market. For the refineries, what they earn is the processing fees from PPMC. That is the structure on ground today. PPMC also has a lot of issues,(pipe) lines are vandalised, they lose a lot of the crude before it gets to the refineries and same thing when the products are produced before they get to the end user. They carry the burden of these losses.If they eliminate these problems, the costs will be lower." Chukwu was also honest enough to admit that the NNPC was not equipped for a deregulated petroleum products sector when he said as follows, "The question has been asked that, can we survive deregulation' And the answer is that the way we are today, no. For us to survive we must look at how we can make the refineries efficient".In Volume 5 Issue 15 of the Marine and Petroleum Nigeria, Gary Still, Executive Director, CITAC Africa LLP, delved into the Nigerian petroleum products structure from the importation perspective. He outlined the challenges faced in products importation into Nigeria."The main problem today is probably the subsidies and the fact that it is so much a two-tier market, so you have liberalised AGO market but still have a regulated PMS market and once that is addressed it would go a long way in sorting out some of the problems faced today in terms of supply".The Nigerian market is the biggest in the region and everything that happens to the Nigerian market impacts on the surrounding zone. So when things are working properly in the country, it will have a positive impact on the whole region. One of the biggest problems at the moment is that of logistics; when you have a large market and you cant get the products to that market then you have a problem.The current situation is that with the refineries not working anywhere near the required level, the product is imported and this causes some problems especially in terms of congestion.In the main import area such as Lagos there is probably on paper enough storage to receive these products and you have problems such as inadequate draft at the Apapa jetties to receive goods from the laden ships which means that on a daily basis there are many ship to ship operations that would have to take place offshore.Smaller ships coming to the shore therefore cause further congestion and this causes demurrage which finally goes into the cost build-up which ends up with the government paying it or the consumer bearing the brunt."Thanks to Chukwu and Still, one is further convinced beyond doubt that the Federal Government, its agencies, parastatals and organs involvement in the petroleum products business, whether through local refining of crude oil and distribution of products, or importation, discharge, storage and distribution of products, are the real problem.Until the Federal Government is kicked out of the petroleum products business and assumes only a regulatory role, such as happened in the telecommunications business, our economy stands in grave danger of being bankrupted by the monopolistic role played by government and the increasing cost attendant to this monopoly.Since the Federal Government was kicked out of the telecommunications sector 10 years ago, telephones that David Mark, then communications minister, said were not meant for the poor, have become as common as pure water, with 120 million phone lines in effective use, and phone cost charges falling drastically as the fight for market share intensifies among phone operators.Demanding that the government continues with the present structure with its inefficiencies and diabolical cost overhang, is like insisting that NITEL, the government owned telephone company that is now comatose, should have been allowed to continue with its telephone monopoly and to solely implement the GSM standard in Nigeria.Chukwu, is right when he says that NNPC refineries will not be able to survive in a deregulated environment due to their inefficiencies, and I want to add that the NNPC structures including PPMC, PPPRA, and the refineries should be allowed to die the way NITEL has now died.The new cannot emerge unless the old dies, and as GLO, MTN, Airtel, Etisalat, Visafone, Starcomms et al have arisen from the ashes of NITEL, so also new refineries, improved and efficient products distribution companies must be allowed to arise from the death of NNPC controlled petroleum structure.In the last 10 years, the Federal Government has not voted a Kobo for the telecommunications sector, yet billions of US Dollars have been invested by private operators, trillions of Naira collected in taxes, charges, and duties by government, hundreds of thousands of direct and indirect employment opportunities created, with the financial sector booming and much more.The greatest beneficiary of deregulation in the telecommunications sector has been the ordinary Nigerian who today cannot contemplate what life would be like without his or her mobile phone, as the improvements brought to bear in the quality of living by effective communication are too innumerable to mention, the least being that ethnicity, tribalism, favouritism, and godfatherism have no role to play in the sectorDeregulation in the petroleum products sector will eliminate the interfering roles of the Federal Government and its many inefficient agencies such as the NNPC, PPPRA, Petroleum Equalisation Trust Fund, and Ministry of Petroleum Resources thus leaving the Department of Petroleum Resources to play its regulatory role and genuine refiners and marketers of petroleum products to emerge.In my minds eye, I see a Niger Delta bustling with refineries, plants, processes, and operations that add value to the oil and gas we have in abundance. I see unemployment disappearing, and the Nigerian productivity index rising to unimaginable heights. I see the financial, manufacturing, and agricultural sectors complementing one another and working at full capacity.I see an educated, skilled, and robust Nigerian workforce that rises to meet the challenges presented by increased development. I imagine our ports bustling with vessels most of which belong to Nigerians and employing Nigerians, shipping these finished products worldwide, and not the other way round. Then, we can use what some have called a curse to transform Nigeria by generating wealth that endures long after the oil and gas is exhausted.Omose, a lawyer and financial analyst, wrote in from 25, Warehouse Road Apapa, Lagos via kingsleyomose@gmail.com
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