By Engr. Godwin Asiobe
“Privatization” has been a fashionably recurring word in Nigeria over the last couple of decades. If it was meant to be the “be all and end all” to Nigeria’s painfully stunted growth, it has certainly not proved to be the “magic wand” that the country has been waiting for. Although the subject here is on the Downstream sector of the Oil and Gas Industry, it will be most beneficial for us to look at the issue as it affects all facets of activities in the Country.
The recent action of the Federal Government in NATIONALISING three well-known banks is instructive! The publicized information on the revelations at the Senate Committee looking into the “Privatization” exercise is enough for the conclusion that the programme has not, exactly, been a success, to be reached, without any fears of contradiction.
It is well-taken that the main objective of “privatizing” government enterprises is to give them to “private” hands with minimal government involvement in their management. The three refineries in the country are owned and operated by the Nigerian National Petroleum Corporation (NNPC). The employees of NNPC are “private” individuals. It can, therefore, be argued that the refineries are already in “private” hands! What we should be talking about is HOW TO UNTIE THOSE HANDS!
NNPC has produced some of the most competent refiners in the world. The staff in NNPC’s refineries are some of the best that can be found anywhere on earth. What the Nigerian Society of Chemical Engineers (NSChE) should be doing is to evolve impregnable strategies with which these highly capable and experienced hands can be ALLOWED to run the plants.
From whatever angle it is viewed, it is safe to say that “privatizing” the refineries, will be handing them over to some political and well-connected “money bags” at embarrassingly low prices. There is no guaranty that they will run the plants any better. The whole country, except the lucky buyers, looses! This is not something that NSChE should be seen to be advocating.
In 2002 or there about, some 18 (eighteen) licences were issued by the Department of Petroleum Resources (DPR) to mostly “private” companies, individuals, and even some state governments. Not one refinery has been built in the decade since the licences were issued. Some of us who were consultants to some of these bodies discovered that some of them just wanted an easy way to “crude oil lifting”, with no intention to build any refinery! “Non-deregulation” and the “low” price of petrol (motor spirit), cannot be said to be responsible for this! How can this be reconciled with the orchestrated clamour for “privatisation”?
Some of us have been to other OPEC countries like Libya. A litre of motor spirit (petrol) costs the equivalent of N10 (ten naira). The refineries there are working very well and they are not owned by “private” individuals. So it still all boils down to the fundamentally flawed system of the Nigerian project, which NSChE should be helping to change. “Privatisation” is not the answer, obviously.
A case can be made for the Pipelines and Products Marketing Company Limited to be “uplifted and revamped”, but it should remain as it is-a fully owned subsidiary of NNPC. If NNPC is to be at par with the Petronas and Petrobras of this world, it must retain its “cash cow”– PPMC.
The Eleme Petrochemicals Company Limited (EPCL) is being touted as the best proof of the success of the “Privatisation” programme. EPCL may have been able to remain productive under Indorama. THIS WOULD BE BECAUSE THEIR HANDS ARE NOT TIED. However, the true story of the “privatisation” should actually be a source embarrassment to the country.
Who are the “real owners” of EPCL, today?? How could a complex worth over $1bn be sold to a company that had no experience in running petrochemical plants, for about $200 million? How come the NNPC appointed Managing Director was airlifted to Aso Rock in the middle of the night to sign the handover papers? How come Indorama does not say that for the first year of their operations, they “begged” NNPC to allow some of their staff to TRAIN them?
Why is it that Indorama does not tell Nigerians how many Indians are working at EPCL?? They never fail to tell the world that they have provided jobs for over a thousand Nigerians. What is the ratio of Nigerians to Indians at EPCL, five years after the complex was “gifted” to them? Does anybody care about the fact that EPCL staff who were trained in the high technology of operating an Ethylene Plant, and other petrochemical processes, were scattered all over NNPC.
The expensive training and experience have been lost by the country. The talk about the EPCL model is interesting. But why was the Bonny LNG model that was agreed on, dumped to give Indorama seventy-five percent of EPCL? Who are those actually benefitting from this rather “sweet” arrangement? Why have Nigerians never been told that under the current Group Managing Director, as the Managing Director (of EPCL), EPCL was self-sustaining and making a very healthy profit and that in order to “facilitate” the murky take-over of EPCL, he was suddenly and unceremoniously transferred to another directorate in NNPC?
Can Nigeria say today that EPCL, with its 900 hectares of land is, truly, a Nigerian complex? Is it not better to say that it is an Indian complex being run by Indians for some faceless people? Is the token ten percent purportedly given to Rivers State not a sweetener designed to hoodwink the country? EPCL was projected to be developed in three phases. Only the first phase has been completed with all the success being claimed by Indorama. We only read of the plans to “expand” it in the newspapers. Five years is enough time for work to have been completed on any genuine expansion.
The above, on EPCL, is not exhaustive! If this is a beneficial “privatisation” for Nigeria, then most people would recommend that the country should thread most carefully in this “privatisation” hype.
NSChE’s initiative on the Study Group is commendable. It is suggested that NSChE should be actively involved in finding the modalities to make NNPC a major International Oil Company like ARAMCO, ADNOC, Sonatrach etc.
This piece first appeared in October 2011. It was written by the author as a memo to the Nigerian Society of Chemical Engineers (NSChE) when the NSChE sought the views of its fellows on the privatisation of the country’s refineries. The author sent it in response to the article, The Fuel Subsidy Conundrum (a two-part series published here:
Engr. Godwin Asiobe (not real name) is a retired staff of the Nigerian National Petroleum Corporation and former director at the Eleme Petrochemicals Company Limited (EPCL) which used to be a subsidiary of the NNPC until it was “privatised” (read: “dashed/gifted” to some faceless people!) some years back.
Engr. Asiobe had the privilege of being involved in the EPCL Project from concept to engineering, construction and commissioning until August, 1995, when the first product, Polypropylene, from the Complex was produced.
“Nigerians should ask that the “true owners” of EPCL be publicly, indentified. The Indians who have replaced Nigerians in the running of the Complex, are fronting for some people. I know that, in spite of the hype, Nigerian man-power is not being effectively developed in the critical Petrochemical Sector of the Oil Industry”, says Engr. Asiobe.
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