Promoting private refineries in the Niger Delta

The move by the Buhari administration to legalise the so-called “illegal” refineries in the Niger Delta into modular refineries is a positive step in the right direction. It has been the desire of patriotic Nigerians to have the refineries licensed and controlled rather than having them destroyed with severe consequences

The “illegal” refineries have been so-called because government has not been able to muster the courage and will power to do the needful by developing a workable framework that would give legal backing to the refineries and have them integrated into the oil industry. The communities and indeed the country stand to benefit from such a framework. As a matter of fact, government has been working against its much cherished local content policy, economic diversification and inclusive growth.

The preoccupation with confronting militants in the Niger Delta beclouded government’s power to take a second look at what ordinarily should be the people’s natural occupation. It is gladdening that after years of confrontation in the creeks, which has not brought peace, government’s shift in position is heartwarming. This singular decision is a recipe for lasting peace in the area.

According to reports, President Muhammadu Buhari’s new vision for the oil-producing communities is emerging in an idea being worked out to explore how some of the “illegal” refineries and the local communities could be made shareholders in the proposed modular refineries concept of the Federal Government.

This is sequel to the promises made by the Federal Government to the communities during the presidential town hall meetings in the oil-producing states. Vice President, Yemi Osinbajo, has of recent, championed the cause of the oil-producing communities by leading a powerful government delegation to meet and interact with the people.

Senior Special Assistant on Media and Publicity to the Vice President, Laolu Akande, explained in a statement that the plan is part of President Muhammadu Buri’s new vision for the oil-producing communities. He said the modalities are being worked out to explore how some of the “illegal” refineries and the communities could become shareholders in the proposed modular refineries scheme of the Federal Government.

Under the plan, government would supply crude to the local refineries at a reasonably concessioned price as an incentive to stop the vandalisation and stealing of crude oil by the operators of the refineries.

If this could be achieved, government would have secured peace by the power of positive thinking without firing a shot. Besides, marginal field operators are being considered to supply crude to the modular refineries into which the “illegal” refineries would be integrated.

Thinking through this idea and having it implemented will not be without hurdles. But what success has been achieved without passing through some hurdles? The technical and engineering imperatives are not insurmountable. The Nigeria Sovereign Investment Agency (NSIA) and the presidency, which are spearheading the effort, will, no doubt, be able to overcome the hurdles once they are committed.

Already, reports indicate that industry experts and practitioners have been brainstorming on how to implement the modular refinery scheme. The experts are reportedly working with the Nigerian National Petroleum Corporation (NNPC), Oil and Gas operators, operators of marginal fields, operators of refineries and other technical services providers.

Before now, soldiers deployed to combat militancy in the Niger Delta adopted a scorched-earth policy that sought to destroy the “illegal” refineries. Hundreds or thousands of such mini refineries set up by the locals in the Niger Delta have been destroyed and set ablaze thereby compounding the environmental pollution of land, water and air ravaging the region.

As the refineries were being destroyed, the militants became more vicious and blew several oil facilities, which drastically reduced oil production. It has been a lost battle on both sides. Neither the Federal Government nor the militants was gaining from the fight, which justifies the need for a shift in position.

Modular refineries are made up of smaller and mobile parts that are easily fabricated and transported to site. They come in different sizes and may be in units of 4000 to 30,000 bpd. Some may be as low as 1000 bpd capacity. It takes shorter time to install than the conventional more complex refineries. The refineries focus on the production of petrol without delving into producing lubricating oil, waxes and asphalt that the conventional complex refineries produce.

It is ironic that Nigeria, which is a major oil producer, is frequently confronted with fuel scarcity due to lack of local refining capacity. The four existing refineries are not operative. Consequently, virtually all the refined petroleum products used in the country are imported. Nigeria imports about one million tonnes of petrol monthly.

Unfortunately, fuel importation has been a cesspit of massive corruption. The scarcity of forex in recent months stalled fuel importation and nearly grounded the country. The situation forced the pump price of petrol to the current N145 per litre and the resultant inflation.

But while this went on, petrol which was being produced by local refineries in the Niger Delta was branded illegal and utterly destroyed. The destruction and intolerance of those ventures by the Federal Government runs contrary to the local content policy of government and inclusive economic development.

The first step towards ensuring inclusiveness in resource management in the country is to remove the legal strictures that make it impossible for people to utilise their God-given resources. Communities and states should manage the resources in their domain. The Federal Government should be paid appropriate taxes.

Once the law is changed, each of the 774 local government councils in the country has got some resources to tap to the advantage of the locality, state and country at large. The issue of local content is meaningless when the people are alienated from their land and contribute nothing to national development.

Local content presumes that the people have access to their resources and are able to contribute to national development by the value added from their resources. Only then, also, can we talk of diversification of the economy.

The way the communities living around Lake Chad have access to fishing on the Lake, which is their source of livelihood, is the way people in the Niger Delta should have access to the oil on their land. Rather than destroying the local refining technology and branding them “illegal”, government should promote a framework to have them integrated into the system the way excessive fishing is prohibited for fishing communities and companies.