Nairametrics|For the umpteenth time, the Warri refinery has been shut down. This time due to an issue with one of its gas turbines. From every rational point of reason, the refineries are no longer useful. They are shut down most of the year. At over 30 years old, they have also outlived their useful life. So why then does the government hold on to them ?
The current government believes strongly that by playing a dominant role in the petroleum industry, it will protect the common man from the effects of a huge price increase. Admirable, as this is, Nigeria can not afford the costs of such a subsidy. The NNPC has become the sole importer of petroleum products, and it sells at a discount to oil marketers. The corporation is currently operating at a loss running into billions of Naira. The four refineries combined, presently produce roughly 30% of petroleum products used in the country.
The firm but inefficient grip the government has on the oil sector, needs to be loosened so private investors can come in. Private refineries can not work if the government dictates the price that petroleum products should sell.
This post is full of contradictions and the author displays a lot of ignorance in the operations of refineries, the oil and gas industry and government policy as a whole.
For one, that a refinery is 30 years old does not mean it has outlived its useful life. Heck, many of the most efficient refineries in the world are close to or over 100 years old!
As much as it is expedient that the full spectrum of the petroleum industry is deregulated to allow participation of the private sector, privatisation or whatever guise deregulation takes has not always worked out well for the country.
As such, what might be best for the refineries is a model allowing government and expert refinery operators co-own these national assets, just like it is in NLNG. This should give government some level of control while ensuring that the entities are operated profitably.