Nigeria: Labour halts refineries sell-off

Nigeria: Labour halts refineries sell-off

The Nigerian government’s plans to sell the nation’s four poorly run refineries to private investors this year has been put on hold following threats by oil workers to go on strike to protest the proposed transfer of ownership. Frederick Mordi reports

Nigeria’s Minister of Petroleum Resources, Diezani Alison-Madueke, stirred the hornet’s nest last November when she announced that government would initiate the process of handing over the four state-owned refineries to private investors before the end of the first quarter of this year.

She had said: “We would like to see major infrastructural entities such as refineries moving out of government hands into the private sector. Government does not want to be in the business of running major infrastructure entities and we haven’t done a very good job at it over all these years.”

However, the Minister’s announcement did not go down well with workers in the oil industry. The workers, under the aegis of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the National Union of Petroleum and Natural Gas Workers (NUPENG), threatened to embark on a major nationwide strike should the government go ahead with the planned sale of the refineries.

National president of PENGASSAN, Babatunde Ogun, who said government had not consulted with the oil workers during in the process, added that the plan to sell the refineries is “against the overall national interest and in the interest of a few.”

Ogun said: “You cannot sell something without a model and without Nigerians knowing what you are doing.”

In addition, the oil workers want the Petroleum Industry Bill (PIB) currently before the National Assembly for consideration, to be passed into law as a pre-condition for the sale of the refineries. It is expected that the PIB, will bring about sweeping reforms, in the Nigerian oil and gas sector and ultimately make it more attractive for private investors.

However, despite its lofty objectives, some critical stakeholders in the industry are said to be lobbying against passage of the bill due to vested interests. The four refineries, which have combined installed refining capacities of 445,000 barrels per day (bpd) of crude include: the two-unit 210,000 bpd Port Harcourt Refining Company Limited; the 125,000 bpd Warri Refining and Petrochemical Company Limited, and the Kaduna Refining and Petrochemical Company Limited, with a capacity of 110,000 bpd.

The refineries have been plagued with series of problems for decades and have functioned far below their installed capacities. They encounter frequent shut-downs arising from poor maintenance, pipelines vandalism, and products theft. All these have made the refineries unattractive to potential investors.

Though government had injected billions of dollars into the ailing refineries over the years, there has been little to show for such massive investments. Consequently, Nigeria currently relies on imported petroleum products to meet 70% of its needs.

Government has continued to subsidise fuel imports to cushion the effects of high prices of petroleum products on the ordinary Nigerian.

Last year alone, government earmarked about $6bn for fuel subsidy. If the four refineries were functioning at optimal capacity, the money could have been channeled into other sectors of the economy.

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Written by African Business Magazine

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