Friday, 2nd June 2023

Ogbimi: 1000km pipe to import crude, white elephant project

By Roseline Okere
25 December 2016   |   3:05 am
The negative implications for laying pipes to import crude petroleum from Niger could be many and quite injurious to the present and future economy of our nation.
Kaduna refinery

Kaduna refinery

Francis Ogbimi is a Professor of Technology Planning and Development at the Faculty of Technology, Obafemi Awolowo University, Ile Ife. In this interview with ROSELINE OKERE, he expressed reservation over government’s plans to import crude oil from Niger Republic.

The Nigerian National Petroleum Corporation (NNPC) recently announced arrangement to import crude petroleum from neighbouring countries to the Kaduna refinery. Are there negative implications of this bilateral arrangement on the Nigeria’s oil industry?
The negative implications for laying pipes to import crude petroleum from Niger could be many and quite injurious to the present and future economy of our nation. The United States, Japan, Germany and many other nations import crude petroleum from other nations. They did not lay pipes to facilitate the importation. They all probably use ocean liners and the seas to import the crude to their many refineries. Nigeria has one refinery in Kaduna.

Nigerian refineries generally spend more time in downturn than in operation. What quantity of crude petroleum does the Kaduna refinery refine in a year? How many times in a year does the Kaduna refinery receive crude from Venezuela, where Nigeria traditionally imports heavy crude petroleum? How long has the Kaduna refinery been in operation? Why is the project to build the pipeline to import crude from Niger just coming up now? Is Niger just becoming a member of the petroleum producing nations? What is the quantity of crude in Niger’s soils? How long would it take to translate the large cost of building the 1000 km petroleum-transporting pipeline into advantage over the cost of paying for importation of crude from Venezuela? Will the pipe-laying exercise serve as a job creating and learning exercise for Nigerians?

The plan by NNPC and its owner to build 1000km-pipe to import heavy crude petroleum for the Kaduna refinery remains a white elephant project like all Nigeria’s projects since independence. That is because the above crucial questions, which ought to be answered to determine the necessity of the project would not be examined. The implications are that Nigerian oil industry would continue to fund corruption, as it has been doing. Nigeria will continue to use a higher proportion of its revenue to service unnecessary debts, the economy will suffer stagnation and stagflation and the citizenry will experience increased poverty and hopelessness.

Will the plan to build 1000-km pipeline to import crude petroleum from Niger not reduce the Federal Government’s effort aimed at solving the Niger Delta crisis and pipeline vandalism in Nigeria?
Nigerian leaders have never endeavoured to addressed real development issues. Important problems do not attract attention in Nigeria. Only issues that can be the basis of very large contracts attract attention in Nigeria. The Buhari government like many others before it is more interested in showing military might in the Niger Delta. Unfortunately, like Rev. Fr. Ehusani said many years ago, we cannot have peace in pieces. All of us either have peace or no one has peace. So, the rest of Nigeria cannot have peace until there is peace in the Niger Delta and there cannot be development in Nigeria until there is development in the Niger Delta. This is because it may not be possible for wise men and women to get into leadership position, as long as the Niger Delta exists as a symbol of oppression.

What is the bilateral nature of this deal; where two nations partner to refine, what would be the cost to either partner and revenue sharing formula?
There is nothing that suggests that Niger Republic is interested in refining crude petroleum in Nigeria. Also, there is nothing to suggest that the sale of Niger’s crude depends strongly on Nigeria’s patronage. So, the plan by the Nigerian government to build a 1000km pipe to import heavy crude petroleum from Niger Republic may not truly be a bilateral one. On the other hand, the benefit of the pipe-laying project to Niger may be small to the extent that Nigeria could act as the ‘Big Brother’ or presumed ‘Giant of Africa’ and bear the full cost of the project.

Will the discovery of crude petroleum in Niger and the proposed 1000 km-pipe for importing crude from Niger possibly increase Nigeria’s exploration for oil in the northern part of Nigeria, especially the Chad Basin?
Yes, it would be wise to increase the intensity of exploration for crude petroleum in the northern part of Nigeria, especially the Chad Basin. First, climatic conditions of Niger and northern Nigeria are similar. The soil formation may also be similar. Quite importantly, it is always good to seek, for he that seeks, finds.

Though the Nigerian government has declared its commitment to build the pipeline, do you think our government will be able to secure funds to build the pipeline in the midst of the present economic recession?
Nigerians are very funny. Recently, government officials at all levels were saying that the cost of borrowing is lower abroad, especially with the multilateral bodies like the World Bank and IMF. They were making that claim because they lack a sense of history and because they refused to think and reason. If they have a sense of history, they would have remembered that Nigeria and other African nations were virtually forced to adopt the African Structural Adjustment Programmes (SAPs) in the 1980s; the African SAPs are quite similar to the punitive German SAP, which the Allied Powers subjected Germany to. Germany and Axis Powers lost World War I and did not have $33b to pay as war reparations to the Allied Powers. The adoption of SAPs by African nations is Africa’s second major disgrace. African SAPs are responsible for the high level of unemployment, poverty and violence in the continent today.

The first major disgrace for the Black race is the enslavement of many millions of Africans by the Caucasians in the approximately 400-year period, 1470-1870s and the colonisation of the continent in the period approximately 1850s-1990s. Some of those whom military governments removed from offices in Nigeria narrated in the 1960s and 1970s how Western nations and the so-called World Financial institutions unilaterally raised interest rates of loans that had been secured at lower interest rates and brought about the near insolvency for most African nations in the 1970s. That is beside the various conditionalities that the World Bank and IMF attach to the loans they give to African nations. So, there is always money for elephant projects in Nigeria. The 1000 km pipeline project for importing crude petroleum from Niger Republic will get the needed funding, notwithstanding current economic recession. Nigeria can always pay with higher proportion of the oil revenue to pay for the debts. It is projects that are necessary for the development of the nation and social welfare schemes that are starved of funds in Nigeria.

Do you think the proposed 1000 km pipeline will solve the fuel scarcity problem in Nigeria?
Nations do not achieve self-sufficiency through erection of structures or importation. However, an industrialised nation may import an important raw or primary material and add substantial value and live comfortably with it. Japan, Germany, France and many other industrialised nations do not have crude petroleum deposits in their soils and waters; they import the essential raw material and refine in many refineries. Japan has virtually no raw material deposits in its soils and waters. But, because of its high industrialisation status, Japan supplies the purest steel to many nations.

The ridiculous situation in Nigeria is instructive. Nigeria produces large quantities of light crude petroleum through the effort of multinational companies with Nigerians folding their hands over their bodies. This has continued for decades. Consequently, Nigeria has always imported petrol or petroleum motor spirit (pms) and experiences volatile pump prices. So, the laying of 1000km pipeline to Niger Republic to import the heavier crude petroleum will not increase the supply of pms and it will not solve the perennial fuel scarcity problem of Nigeria.