Stop the madness

There is some madness in this. In its issue of September 18, 2020, the Daily Trust reported that the federal government was embarking on “fresh multi-billion naira repairs” of the Warri, Kaduna and Port Harcourt refineries.

Here are the facts established by the newspaper: the federal government spent a cool N276 billion on the refineries in four years; Warri refinery has not produced a litre of petroleum product since 2016; it laid off 2,000 technical staff in January this year; Kaduna refinery has not refined petroleum since 2017; Port Harcourt refinery, like its Kaduna counterpart, has not refined one drop of petroleum since 2017. These refineries have been idle because they have been crippled.

Between 2013 and 2015, the government spent $396.33 million on their turn around maintenance that turned nothing around and maintained nothing. But since there was money to waste, no problem and so between 2015 and 2018 the government splashed another N276.872 billion on turn around maintenance. Nothing has changed in those refineries. Is it not madness for the government to embark on the pretence of repairing these refineries that have so far defied repairs and turn around maintenance?

This level of waste is a monumental scandal. Or, to put it more nicely, it would be a scandal in countries where leaders care for their integrity. That a country with four oil refineries is a net importer of fuel would be outrageous in any other country but our dear Nigeria. The government did not just wake up one day and found that the refineries had become moribund. No one was ignorant of the continuing problems with the refineries. They were set up at different times to produce enough petroleum products for domestic consumption and export to the West African sub-region. But they have been a huge disappointment. From what we know, none of the three refineries has ever produced to its full installed capacity. Their failure invited the motley crowd of fuel importers who were, until recently, subsidised by the government to arguably bear part of the cost to save the local consumers from the vagaries of market forces.

These refineries are too old and too ancient. There is no argument about that. They cannot be economically repaired and therefore any attempts, for whatever reason, to repair them would only deepen our collective misery. The clear option before the government is to sell them off as scraps and use whatever is realised from the sales to build one modern refinery that would, together with the Dangote Refinery and the modular refineries in Bayelsa and Edo states meet our local fuel supply needs when they come on stream next year.

Better still, current conventional wisdom does not favour government investments in purely commercial enterprises. Such investments made sense when the country did not have enough local businessmen to run such enterprises. The situation is vastly different today. Nigerian entrepreneurs have since come of age. Government no longer has any business involving itself in commercial enterprises such as oil refineries when the private sector is better equipped to drive such industries.

We once ran a mixed economy in which federal and state governments felt obliged to invest in such commercial enterprises as breweries, cement factories and transport services. We no longer need to run a mixed economy. Former President Ibrahim Babangida saw that coming decided to sell off government shares in commercial enterprises through his right-headed policy of privatisation and commercialisation of enterprises best left to the private sector. Thanks to him, governments pulled out their stupid investments in breweries and cement factories, among others. We still buy beer at affordable prices, I tell you. Come to think, which commercial enterprise set up by federal and state governments ever succeeded in the country? All of them were drain pipes, useful only for rewarding political supporters with board appointments.

The world has moved on. We must run a pure capitalist economy with government restricted to providing the enabling environment and, where necessary, regulations to ensure quality and safety, etc. President Muhammadu Buhari is the substantive minister of petroleum resources. He has held that position for the past five years. I thought his decision to run the ministry was based on his experience as a commissioner for petroleum resources and chairman of the board of NNPC in the Murtala/Obasanjo regime and that he wants to personally sanitize this vital national industry and end the scandalous and corrupt fuel subsidy regime.

I  am willing to hazard a guess that he is not unaware that the three refineries have become a major source of financial waste as, in corruption. I am sure he knows that these refineries have long past their due date and can no longer be economically repaired. I am sure he knows much better than the rest of us that it would be sheer madness for the federal government to now embark on the “multi-billion Naira repairs” of these refineries. In the end, the money would go down the drain; no one would be held responsible for the ill-advised repairs and once more the people would have been roundly cheated.

A few weeks ago, the president did the correct and courageous thing when he de-regulated the petroleum sector and allowed market forces rather than subsidy to determine the price of fuel. He still has to deal with the fall out of the decision, what with labour threatening to shut down the country over it. But such falls could be managed in time. It was, I am sure, a painful decision for him to take at this rather rough times in the national economy, but some of us helped to justify it on the grounds that the subsidy did not benefit the people it was supposed to benefit. Better to run off the spigot and let the subsidy billionaires stew.

Buhari can take this to the next and logical level by fully de-regulating the federal government involvement in the petroleum industry. Government has no business trying to revive a dead horse. If the refineries could not meet our fuel needs when they were healthy, how can they do so now that they are obsolete? No turn around maintenance would turn them around. Everyone, except those who stand to gain from further waste on them, can see that it would be cheaper to build a more modern refinery than to keep them alive after a fashion. In any case, government has no business investing in or running refineries any more.

Aliko Dangote and other citizen-entrepreneurs are about to show that private sector investors can do a far better job of running refineries much more competently and to our collective benefit than the federal government has done all these years. Let the refineries go. The shame is not in letting them go but in the government foolishly holding on to them and willing to waste more scarce financial resources on them. These refineries have already achieved the  status of a metaphor for waste and want. That is good enough for them.