Amidst the doubts expressed in many quarters as to whether or not the country?s local petroleum refining capacity has improved, it is instructive that the price of petrol has dropped marginally, giving an impression that all is well with the downstream sector of the industry. The recent spike in global oil prices may dampen that reality. Those who doubted any improvement in local capacity, including former President Olusegun Obasanjo, definitely have their good reasons, mostly based on their experience at the pinnacle of government. This is a doubt that the Nigerian National Petroleum Company Limited (NNPCL) must debunk fully if they are to be taken seriously. While the price of crude oil will always impact on prices of the products, availability, rather than scarcity, will always act to mediate. Therefore, if the supply of petrol, for instance, improves drastically, there is every hope that the price will fall. The NNPCL can only convince Nigerians that it is on top of petroleum products supply when and if the prices come down.

Nevertheless, there seems an easing of pressure on Nigeria?s downstream petroleum sector, with significant improvement recorded in local refining. The inauguration of the Dangote Refinery Limited (DRL), despite the initial back and forth with the government and the NNPCL, over pricing and control, threw a challenge to other operators in the sector to optimise their operations. Today, if there is a substance in the claim of the corporation, apart from DRL, government-owned refineries in Port Harcourt and Warri are back to work after almost a decade of redundancy. This ramping up is a welcome development, one that in no time should translate to sustained product availability and affordability.

According to NNPCL, the Port Harcourt Refinery now operates at 60 per cent capacity, processing 65,000 barrels of crude per day. The Warri Refining and Petrochemical Company (WRPC), is also refining, though not at full capacity, yet. The government has also promised to get the Kaduna Refining and Petrochemical Company (KPRC), working soonest.

In addition, there are five modular refineries reported to be in operation, producing Kerosene, diesel, black oil, naphtha and others. They are: Aradel Refineries in Rivers State; Excel Exploration and Production Company Limited in Bayelsa; Waltersmith Petroman Modular Refinery and Petrochemical Company Limited (WRPC); Edo Refinery in Ologbo, Delta State; Duport Refinery, also in Edo and Azikel Petroleum Limited, Bayelsa State. Other licensed modular refineries are reported to be at different stages of completion across the country. In no time, there should be suffuse of petroleum products in the country.

That?s an encouragement for local value addition in the industry and the saving of forex spent on the importation of refined products. For too long, Nigerians have borne the brunt of governance failure in the oil and gas sector of the economy. The country embarked on local refining of products early in 1965 when the old Port Harcourt refinery was commissioned, along with that of Warri in 1978, Kaduna in 1980 and the new Port Harcourt Refinery in 1989, with a combined capacity of 445,000 barrels of refining capacity, the intervening years between then and now was most pathetic for the industry and Nigerians. The refineries, apart from not producing at full capacity became conduits for mismanaging resources in the name of Turn Around Maintenance (TAM). Between 2002 and 2022, it is reported that the NNPC spent N17 trillion (more than N800 billion annually) in the purported maintenance of refineries for 20 years. Yet, the assets remained comatose.

In the absence of local refining, the country, a net producer of crude oil relied on imported refined products to drive the economy, losing money, prestige and energy security. The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the country spent $600 million every month on fuel imports. Some of the imports, he lamented were diverted to neighbouring countries, through porous borders and by unscrupulous economic saboteurs.

Before then, many Nigerians criminally benefitted from fuel subsidy scams and were never brought to book. The Federal Government in 2012, instituted the Aigboje Aig-Imoukhude panel, to verify and reconcile the records of payments on fuel subsidy. Also, the Senate ordered investigations into fuel subsidy claims, but Nigerians are yet to see arrests and prosecutions. Going forward, the government should revisit the files and prosecute anybody found culpable.

Given the wide and comprehensive provisions of the Petroleum Industry Act (PIA), the Federal Government should open the industry for scrutiny, particularly the activities of the NNPCL. It is embarrassing that many Nigerians were not convinced when the NNPCL announced the resumption of refining activities at the Port Harcourt and Warri refineries. There is only one reason for that unbelief: lack of transparency.

Nigerians demand that transparency be the watchword at NNPCL and in the oil and gas sector of the economy. Is the country still importing finished petroleum products despite a rebound in the local refining capacity? Between October 1 and November 11, 2024, the NNPCL and other marketers were reported to have imported over two billion litres of petrol. Although the market is now deregulated, regulators should not lose sight of the fact that local refining can boost jobs and protect Nigeria?s foreign reserves. At the end of the day, local investment deserves protection.

Equally, the NNPCL should demonstrate fidelity to the agreement on a steady supply of crude to local refineries, as that is the surest way to maximise both competitive and comparative advantages of having refineries close to sources of raw material. The Naira for Crude agreement is another positive for the local industry.

It is discouraging to read stories of local refineries building storage tanks to store imported crude because supplies earlier promised by NNPCL are no longer guaranteed. This is the time to ramp up crude production and no effort should be wasted in that regard.

Despite a marginal decrease in the pump price of petrol in recent weeks, the current cost of over N900 per litre is way too high with its wide collateral damage to the economy particularly through the high cost of transportation. As oil prices fluctuate, there are concerns about rising prices in the days ahead. Nigerians yearn for substantial drop in their cost of living, as the downstream sector stabilises. (The Guardian Editorial)

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