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Problem Of Warri Refinery Is Lack Of Crude, Says Esele

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Esele

Esele

Comrade Peter Esele, former President of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and Trade Union Congress (TUC) speaks on the perennial fuel scarcity, subsidy palaver between the importers and the government and other issues in the oil sector

WHAT are your views on the perennial fuel scarcity and the subsidy palaver in the country?
It is a big disappointment and shame that a country that produces over two million barrel of crude oil daily can give her citizens fuel. The problem did not start today. It is age-long and it has become persistent. From 1999 till date this has been a perennial problem and it appears there is no end in sight. This is because none of those in positions of authority has been able to find solution to it.

I am happy with what is going on now because it may make the incoming- government of General Muhammadu Buhari (rtd) to put on a thinking cap, knowing that this is one major problem his government will be judge with, depending how it proffers solution to it.

The marketers said government still owed them. To be sincere in any business, the supplier has the right to withdraw services if he is being owed. That is what the fuel importers did, but whether the whole claim is a scam or not is left for the government to prove.

The marketers have the right to get the money for the services or products they have imported and government has the responsibility to say No your claims are wrong, because you did not supply the quantity of products you are claiming. In doing this, there must be proper documentation. One thing that is clear is that there is on proper documentation. It shows that we are not doing thing properly as a government, people, leaders and the led. There is no accountability in the way the whole thing has been handled. That is why we are witnessing disagreement between the government and the importers on what was imported, paid and owed.

What do you think is responsible for no proper documentation in the subsidy issues, considering that governance is a serious business?
The bottomline is that there is political side of the decision that was taken. The political side is that government at a time reduced the pump price from N97 to N87, but such did not reduce the subsidy payment. After the reduction, government went ahead and devalued the Naira.

Before arriving at such decision, government would have looked at the political and economic implications. I have always believe that in making any decision that will affect the lives of the people, the economic implication must be weighed first before political and others should be considered.

The importers brought in product and sold at N87 against their will, government need to make up the differential. When you now look at the entire template you will find out that whether the price of crude is high or low, Nigerians are not benefitting.

We may say we are benefitting because we build excess foreign reserve for nine months, but you will find out that we are not benefiting because government will tell you that they are spending so much on subsidy that is not transparent.

When the price of crude is low, the government devalued the Naira without considering that the product is being imported. Ordinarily we do not need to pay for subsidy because of the price of crude in international market, but because everything is being imported, the government is paying for it.

Is there no way out of this persistent subsidy row between importers and government?
The bottomline is that if you bought a barrel of crude for 100 dollars six months ago, and now you are buying it 150 dollars, whether you like it or not, you will have price differential. So the difference between the actual price and what was supposed to pay which the government is paying is what is called subsidy. Whether such is transparently done to protect Nigerians is where the government institutions should be hold responsible.

Laws are not made for good people but for those who are always ready to undermine the system. If the government felt that the marketers are defrauding Nigerians, there are many avenues to nip it in the bud. There is nothing wrong for Minister of Finance and Petroleum Products Pricing Regulatory Agency (PPPRA) to come out with documents that authenticate marketers’ claim or otherwise.

After all, there are paper trails to confirm the movement of vessels from where they were loaded to its destination. I am aware that in the past, they manipulate paper trails but there are other ways of tracking such manipulations. So one can easily know how many vessels that are on the sea coming to Nigeria. There are systems to monitor all these, but either by commission or omission people who are responsible for this have deliberately decided that they are not interested.

Are you in support of subsidy removal by the incoming government?
Before we do that, we have to ask ourselves we have scarcity now, NNPC keeps telling us that they have 90 days stock. Marketers said they are not importing again, the question is where are the NNPC 90 days stock. It is now that Nigerians need the NNPC 90 day stock to caution the effect of the fuel scarcity.

If NNPC is doing reconciliation, let them give Nigerians only 30 days stock now. Why is that from the day marketers said that they are not importing again, we have been in trouble. That is the reason I keep talking about process. This is because when you don’t do things right, this is the result you get.

I will not say yes or no to subsidy removal, but everything must be driven by principle and process. If the principle and process are transparently carried out and effectively communicated to those that are affected, there will be good result and acceptance. If we say we are going to remove subsidy, there are fundamental challenges that will arise that must be address. If we say we will continue with subsidy, we must devise means of raising money because subsidy budget for this year is almost exhausted and the year has not gone half. This is why the incoming administration must put on a thinking cap.

I don’t envy the president-elect and he has said it that he is becoming president at a wrong time. Buhari can be our hero by being able to overcome these challenges. We have not had a leader we can call our hero. If he fails to do so, it means that there are more challenges ahead. The fundamental issue is not whether to remove subsidy or not but how can we transparently manage our resources for the good of common Nigerians.

The biggest challenge faced by the outgoing government of President Goodluck Jonathan is trust deficit. Even when you want to do something that will be beneficial to the people, they will fight it because of trust deficit. It is a problem the incoming administration must avoid like a plague.

Our refineries are working, but I cannot explain why crude are not being allocated to Warri Refinery. The Refinery is not as bad as it is being painted. The major problem is that it has no crude to refine often. Port Harcourt Refinery worked for 21 days in November last year and generated billions of Naira. What has happened since then? I cannot confirm, but there are schools of thought which say that the refineries are being painted bad so that they can be sold to some vested interests at a give away price. Why is crude not allocated to our refineries often, whereas we export crude often to refine abroad? Why do we believe so much in carrying crude outside to refine? This is a food for thought for the incoming government.

Why is that the outgoing administration is unable to prosecute those alleged to have been involved in fuel subsidy scam?
That is why there are always fierce debate and in-fighting whenever the issue of subsidy removal is raised. When Reginald Stanley was the executive secretary of PPPRA we have more than 100 people importing fuel, he reduced it to 40. He reduced the quantity being imported because there is controversy over the actual quantity of fuel Nigerians consume daily. He was on the right path, but before you know what was happening, he was removed from office.

Right now there are still argument on the actual quantity of fuel we consume daily. The problem is not about NNPC alone, it is about the legislature and executive. If things are going wrong in your house and you allow your security man to be the head of the house, there is more problem.

Our leaders have always see NNPC as a cash cow. If executive needs money urgently to fix anything, it will rush to NNPC. I have always say that the NNPC must be allow to run like a commercial venture but politicians will not allow it to run.

What about licences that were issued to some individuals to build refineries some years ago?
They were political licences. How many people have build refineries since then? The serious ones among them are Dangote and Orient Petroleum. To do business in the oil sector, you must be a serious-minded businessman. You must have patience because downstream sector is run by margin. It is not a place to make quick money without working for it.

Serious-minded investors will also want to be sure of certain things before investing to avoid being caught in the web of policy somersault by government. I am a member of PIB Task Force, but I can tell you that I don’t even know which version of it is before National Assembly for passage into law now. But I am very optimistic that the incoming government will find solutions to these problems by bringing out a template on how things can be done differently in the oil sector.


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