Refinery Outsourcing: The permanent solution to Fuel Scarcity in Nigeria – Abraham


By Olusegun Abraham


There are no ways to spin it; it is undeniable shame that in an oil-producing country as big as ours, in Nigeria, fuel scarcity is a perennial problem. The recurring sighting of long queues at our filling stations should disturb any thoughtful mind and make one ask why this ill situation has remained so till now, after many years of supposed management in this sector of our national life.

The amount of man hours that has been lost to the queues and the attendant traffic has been set at 16 hours daily, and that’s almost 1 Billion Naira worth of productivity lost daily. Thankfully, we’ve got a present federal government who isn’t hostile to new and fresh ideas to tackle this menace, has it is clear judging by their recent moves to allay the situation, that the the government is putting all hands on deck to end the shaming crisis once and for all.

I believe it simply requires thinking beyond the surface to proffer a lasting solution to this recurrent ill though. Now that the present crude oil price has fallen, the federal government can solve this problem of fuel scarcity by outsourcing the processing and refining of out crude oil, and afterwards bring back the refined product for distribution and sale, at 50% off the present cost.

Since we produce crude oil, it only makes sense that we shouldn’t continue to have persistent fuel scarcity, it makes us a laughing stock in the comity of nations. We shouldn’t be starved of what we have the ability to produce in abundant measures.

It isn’t rocket science to understand that a decision by the country’s NNPC/PPMC, to simply employ or contract the refining of our crude offshore, and just pay only for the cost of that refining, will help allay this current unpalatable situation.

With this arrangement, the price of refined product would not be more than N30/litre. This will not only solve the fuel scarcity, it will also deflate the economy, thus, reduce the cost of creating energy, cost of generating electricity, cost of transportation, and the cost of running industries, etc. The overall effect of this is a favorable and drastic reduction in the cost of products and services, making general livelihood better.

It is only when this is done, that is, employing the wisdom of outsourcing crude oil refining for both short term and long term benefit that the country can then talk about practical developmental ideals of industrialization, incentive-driven attraction of foreign investment, and the development and encouragement of entrepreneurship.

We will remain in this awkward and strange situation that leaves us a mere laughing stock, if we refuse this idea of outsourcing and leave the fate of the whole country in the hands of few cartels who control the production and distribution of Petroleum products.

The Minister of state for Petroleum, Dr. Ibe Kachikwu, should be ready to take necessary steps to encourage this move that will not only ensure fuel flows readily, but also at half the present pump price.

It only takes careful thought to know that if we were selling PMS at N97/litre when the price of crude oil was $140/barrel, how much should we now be selling PMS when the crude oil price is at an average $25 per barrel? From this, it takes mere elementary mathematics to decipher that the pump price of fuel shouldn’t be more than even N20 per litre.

Added to outsourcing, the federal government should also remove the present restrictions on the importation of fuel, and make it open, while the only job of the NNPC in this regard would be just to regulate this unrestricted access to importation via monitoring and assessment of quality. The present draconian system, where only the NNPC and very few licensed people import, has continuously proven not to be sufficient enough to handle the demand of our giant population.

With this restriction, it just seems like tying both the hands and legs of the people – I mean, when it is consistently clear that a few licensed importers cannot meet the demand of the huge population, why not remove restrictions and grant open access to importation to enterprising Nigerians, and give incentives to Nigerian entrepreneurs to set up refineries in the country by giving them crude oil lifting permit with a provisio that, the profit generated from such will be ploughed back into use for part take-off of the refineries? Why not?? This will do a lot to complement fuel availability and supply.

For the sake of installing human value into our policies, this present progressive government should be honest enough to abandon the mundane and gentile way of doing things, unlike the past administration, if we truly desire progress for the people.

This present gentile style of policy management in the petroleum sector favours corruption at the expense of the people, many small scale businesses are on the death row because of it and it dislocates the economic realities of our people as they are forced to pay for their livelihood at extremely inflated rates.

We must be quite honest with ourselves and get very open to the benefit of outsourcing and the removal of oil importation restrictions; we must forget economic diplomacy in this regard in order to take advantage of the present fall in oil prices to diversify the economy.

We can sensibly manage the situation to get productive results instead of constantly being perennial victims that live the shame of recurring fuel scarcity and grueling queues.

Olusegun Abraham

Olusegun Abraham is a Chartered Engineer, a consummate technocrat, and the frontline governorship aspirant of the All Progressive Congress in the Ondo 2016 election.

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