By Godwin Afam Nkemdiche

Sir: President Bola Tinubu has himself to blame for all the unintended consequences of fuel subsidy removal. And l so aver with a high sense of responsibility. Lest we forget, Tinubu didn’t remove the fuel subsidy, no, he didn’t. His predecessor, President Muhammadu Buhari (of blessed memory), did.

Recall that fuel subsidy had not been included in the national budget from the month Tinubu was scheduled to assume office, June 2023. In reality then, fuel subsidy was gone before Tinubu.

The methodical army general-turned-politician had been very clear-headed about the crucial need to exorcise fuel subsidy. First, he as Minister of Petroleum, directed NNPC to issue Turn-Around-Maintenance (TAM) contracts on the four government owned refineries, Port Harcourt l &ll, Warri and Kaduna.

Available information showed that the completions of Port Harcourt l &ll and Warri TAMs were scheduled to precede Buhari’s exit from power. The combined capacity of those refineries is approximately 330,000 barrels per day. Of course, had those plants come onstream before mid-2023, there wouldn’t have been any talk of providing hundreds of billions of naira in the national budget from Q3/2023 in the name of fuel subsidy.

Regrettably, shoddy execution among other issues, frustrated that goal even as NNPC talked tantalisingly about imminent restreaming of the PH refineries. In the end, however, and expectedly much to the heartbreak of the outgoing president, none of the TAMs was completed at the end of Buhari’s second term in May 2023. Indeed, that shortfall must have been particularly painful for Buhari who, as military federal commissioner (minister) of petroleum, had supervised the building of Warri and PH refineries.

From his early engagements with the Trade Unions in 2023 to the present, Tinubu has not left anyone in doubt about his determination to get the government refineries back to efficient operations – a measure of unwavering loyalty, perhaps.

But barely seven months to the end of his first term, those refineries are still not available; so, what went so terribly wrong? Has the president, as the substantive minister of petroleum, in conjunction with his junior ministers not provided adequate administrative supervision over the ongoing TAMs?

These questions are crucial in unravelling why fuel subsidy removal most regrettably led to protracted hardship for the citizenry, and palpable embarrassment to the federal government in general, and to the NNPC in particular.

The FG has tinkered, and has kept tinkering with all manner of policies, ranging from precipitate rollout of CNG and Electric buses, to sundry cash transfers to vulnerable citizens with a view to cushioning the harsh impact of prohibitive costs of petroleum products. The jury is still out on those palliative measures.

On its part, the NNPC has concluded that the contractors handling the ongoing TAMs cannot deliver the desired results. That’s hardly a surprise to many industry observers, given that the first TAM was issued in 2021 (five years and counting)! The national oil giant has subsequently executed an MoU with two Chinese companies to take over and complete the controversial TAMs.

That decision is the subject of ongoing heated national debate. But it is irresistible to observe that contractors’ competence is not the only factor to be considered in interrogating the interminable TAMs.

Egregious evidence of corruption has been linked to the highest echelon of the refineries’ management personnel, much as hard to fathom vandalisms have been reportedly carried out on PH refineries amid the TAM.

In previous interventions, we had made the point that anyone seeking to effectively solve the decades-old problems in the petroleum downstream has to dig very deep into history, because the challenges are variegated and complex.

The truth is, for about half a century Nigeria’s refining capacity has remained far below break-even-point – an aggregate of 30 per cent capacity utilization is the reported highest figure. Now, capacity utilisation is apparently mistaken to mean the percentage of the particular refinery’s sub-units that are onstream during production.

Refineries’ capacity utilisation is based on their onstream-days in a year. So, a refinery’s sub-units could be all onstream, but if the refinery operated uninterruptedly for say only six months of the year, its capacity utilisation for the period is not 100 per cent but 50 per cent; a significant distinction which is often lacking even in our so-called intellectual interrogation of the petroleum sector. So, we often hear pundits claiming that the famous Lagos refinery is operating at 100 per cent capacity utilisation.

For the avoidance of doubt, we should like to categorically state here that no refinery in Nigeria has operated beyond 120-odd days in a year (30-odd per cent capacity utilisation) in the last 40 or so years. The implication of this damning scenario is that the average refinery in Nigeria is utterly idle for over 200 days in a year!!

Rather than work strenuously to remove that monstrous void, successive federal governments had deployed all manner of fiscal devices, all of which tantamount to fuel subsidy to cover a glaring national ineptitude. As a consequence, an entire Eco-system inexorably evolved into a multi-billion-dollar international industry. That industry is at a virtual war with the Nigerian economy, make no mistake about it!

So, President Buhari had been as right as rain in removing that monster; elsewhere, petroleum refineries are regarded as cash cows of sorts, therefore fuel subsidy cannot be justified in any guise in our clime. But whether or not his adopted plan for its implementation is fit for purpose is another matter altogether. Worse still, we are not sure his successor is reading that plan aright.

Therefore, we should, in all humility, suggest to President Tinubu to come up with a sober thinking cap, because to get Nigeria’s in-country petroleum oil refining capacity utilisation to global parity (90 per cent) is a task that must be done.

The FG has tinkered, and has kept tinkering with all manner of policies, ranging from precipitate rollout of CNG and Electric buses, to sundry cash transfers to vulnerable citizens with a view to cushioning the harsh impact of prohibitive costs of petroleum products. The jury is still out on those palliative measures.

On its part, the NNPC has concluded that the contractors handling the ongoing TAMs cannot deliver the desired results. That’s hardly a surprise to many industry observers, given that the first TAM was issued in 2021 (five years and counting)! The national oil giant has subsequently executed an MoU with two Chinese companies to take over and complete the controversial TAMs. That decision is the subject of ongoing heated national debate. But it is irresistible to observe that contractors’ competence is not the only factor to be considered in interrogating the interminable TAMs. Egregious evidence of corruption has been linked to the highest echelon of the refineries’ management personnel, much as hard to fathom vandalisms have been reportedly carried out on Port Harcourt refineries amid the TAM.

In previous interventions, we had made the point that anyone seeking to effectively solve the decades-old problems in the petroleum downstream has to dig very deep into history, because the challenges are variegated andcomplex. The truth is, for about half a century Nigeria’s refining capacity has remained far below break-even-point – an aggregate of 30 per cent capacity utilisation is the reported highest figure. Now, capacity utilisation is apparently mistaken to mean the percentage of the particular refinery’s sub-units that are onstream during production. Refineries’ capacity utilisation is based on their onstream-days in a year.

So, a refinery’s sub-units could be all onstream, but if the refinery operated uninterruptedly for say only six months of the year, its capacity utilisation for the period is not 100 per cent but 50 per cent; a significant distinction which is often lacking even in our so-called intellectual interrogation of the petroleum sector. So, we often hear pundits claiming that the famous Lagos refinery is operating at 100 per cent capacity utilisation.

For the avoidance of doubt, we should like to categorically state here that no refinery in Nigeria has operated beyond 120-odd days in a year (30-odd per cent capacity utilization) in the last 40 or so years.

The implication of this damning scenario is that the average refinery in Nigeria is utterly idle for over 200 days in a year!! Rather than work strenuously to remove that monstrous void, successive federal governments had deployed all manner of fiscal devices, all of which tantamount to fuel subsidy to cover a glaring national ineptitude. As a consequence, an entire Eco-system inexorably evolved into a multi-billion-dollar international industry. That industry is at a virtual war with the Nigerian economy, make no mistake about it!

So, Buhari had been as right as rain in removing that monster; elsewhere, petroleum refineries are regarded as cash cows of sorts, therefore fuel subsidy cannot be justified in any guise in our clime. But whether or not his adopted plan for its implementation is fit for purpose is another matter altogether.

Worse still, we are not sure his successor is reading that plan aright. Therefore, we should, in all humility, suggest to President Tinubu to come up with a sober thinking cap, because to get Nigeria’s in-country petroleum oil refining capacity utilisation to global parity (90 per cent) is a task that must be done.

Godwin Afam Nkemdiche is an Engineering Consultant based in Abuja.