The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, on Wednesday said Nigeria will cease to import petroleum products and totally depend on its own refined products from 2019.
Kachikwu who made this disclosure while briefing State House correspondents at the end of the weekly Federal Executive Council (FEC) meeting at the Presidential Villa, said already, a steering committee headed by him and another technical committee had been constituted to fine-tune the process.
He also said the council has approved a new policy document on the operations of petroleum sector while he further disclosed that a gas policy had earlier been approved by FEC three weeks ago to change the imperatives of Nigeria from an oil producing country to a gas producing country.
About the new policy
According to him, the new 100-page petroleum policy approved yesterday consisted of plans for the reorganisation of the Nigerian National Petroleum Corporation (NNPC) with a view to achieving efficiency and accountability; address salient issues in the Niger Delta; guarantee stability and consistency in the oil sector, and aid cash calls.
Today, we took to council a Nigerian petroleum policy document. As you are aware, three or four weeks ago, we also considered the Nigerian Gas Policy. The essence of that gas policy was to focus increasingly on how to change the imperatives of seeing Nigeria as an oil producing country to a gas producing country because we are a lot more privileged to have gas than we have oil.
Today’s document focused on oil. It dealt with certain fundamentals and some of the policies that we had already begun to pursue now crystalized in FEC policy memo. For example, we are working assiduously to exit the importation of fuel in 2019. It captured the cash calls change which we have done which enables the sector to fund itself through incremental volumes.
According to him, the policy is a very comprehensive 100-page document that deals with all the spectrum in the industry.
It captured the reorganisation in the NNPC for efficiency and enabled accountability. It captured the issues in the Niger Delta and what we needed to do as a government to focus on stability and consistency in the sector.
Apart from the fluidity in pricing and uncertainty in terms of the price regime in crude oil, we are pushing for a refining processing environment and moving away from exporting to refining petroleum products. Secondly, how we sell our crude is going to be looked at. There are geographical markets that we need to look at, long term contracting and sales as opposed to systemic contracting that we have been doing.
The Minister further remarked that the policy has the potential to fundamentally take the change process that was began in 2015 to its logical conclusion if well executed.
Detailed breakdown of the Plan
Kachikwu further gave a detailed breakdown of the planned stoppage of fuel importation soon. He said 2019 timeline had already been set for the agenda and government was working assiduously towards meeting the target.
According to him, both the steering committee which he heads and the technical committee headed by the Chief Operating Officer of the NNPC, had had a series of meetings with individuals whom he said were prepared to invest in the project.
The minister said the plan was neither about the sale of refineries nor their concession but rather a financing scheme in which he said some groups would build the refineries while others would finance them, noting that at least 30 persons had already showed interests in the financing scheme.
The minister gave the specifies on how the Federal Government intends to achieve the set target and end fuel importation by 2019.
If you take the 2019 time frame for refinery for instance, it won’t tell you what I’m doing today, but it will tell you that I have set a timeline to exit importation and to get the refineries working by 2019.
We have had series of meetings with individuals who are willing to put money into the refineries. I need to state this clearly. This is not a sale and this is not a concession. This is a financing scheme and there are over 30 people who have indicated interest in that financing.
They are going to go through the usual due process mechanism to see who qualifies for that financing. What we have resolved, however, which we have at least have a landing is that each of the refineries would be repaired by the individual company that built the refinery.
He further explained that the project is not going to be government financed, he stated that it is going to be sector-led effort.
Who does the work is different from who finance the work to be done. We are still dialoguing who is going to get the financing opportunity, but who is going to get the contracting opportunity to do the work is already decided.
Government is not putting money into this. lt is going to be sector-led effort and they will recover their money through incremental volumes that will arise from the production increase arising from the repairs. We are doing about 30% performances on most refineries now. So, if you get them to above 90% template, we are going to use some of the product line to pay for some of the debts and free ourselves from the importation problems.
Noting that the refineries, when repaired cannot cover the required consumption, the minister said some level of efficiency and upgrade would increase their capacity.
As reported, Kachikwu also disclosed that owing to the efficiency in the management of the oil sector, the daily consumption of fuel which he said used to be 50 million litres per day when he came on board in 2015 had now drastically dropped to 28 million litres per day.
We are banking on the fact that efficiency steps we are taking will reduce the consumption. We have gone from the 50 million litres per day when I resumed office down to today that is about 28 million litres per day.