The logic
behind the push for privatisation is impeccable. For at least two decades, the
country has been a living contradiction of an oil-rich country due to its heavy
dependence on imported petroleum products. This paradox stemmed from the
decline in the output of its four refineries based in Port Harcourt, Warri and
Kaduna. In spite of the apparent interventions of successive military and
civilian regimes, the country has been unable to get them to work at optimum capacity
until recently.
The huge
import bill led to the creation of a subsidy regime which has been riddled with
poor regulatory oversight and corruption, especially after its dramatic
increase during the tenure of former President Goodluck Jonathan, when it
allegedly rose from N300 billion to N1.9 trillion in the first six months of
his administration.
Privatisation
would create several benefits. It would take the management of refineries out
of the hands of a discredited Nigerian
National Petroleum Corporation (NNPC) and put it in the hands of
established corporations whose main aim would be developing the reliability
that is vital to sustained profit. It would progressively reduce the country’s
dependence on imported petroleum products, and thereby help to end the corrupt
subsidy regime that is based on it. The long-neglected downstream sector of the
oil industry would expand as new players come in to take advantage of increased
opportunities. That, in turn, would accelerate the growth of manufacturing, as
the by-products of refineries become more widely available locally.
Before these
benefits can be attained, however, several obstacles must be overcome. Perhaps
the most prominent is the long-delayed Petroleum Industry Bill (PIB). First
sent to the National Assembly in July 2012, the bill is meant to formally
define institutions, relationships and responsibilities within the oil sector
with the aim of ensuring faster growth and increased local participation and
ownership. It has suffered repeated delays due to the supposed opposition of
multinational oil companies, the emergence of fake versions, and an
inexplicable legislative apathy.
The BPE
claims that the passage of the PIB is vital to the implementation of the
privatisation process. Even if it were not, it is difficult to see how such a
significant policy could go through in the absence of the updated legal and
regulatory framework provided by the PIB.
Then there
is the problem of oil worker hostility. Both the Petroleum and Natural Gas Senior Staff Association of Nigeria
(PENGASSAN) and the Nigeria Union of
Petroleum and Natural Gas Workers (NUPENG) have consistently expressed
their opposition to the privatisation of state-owned refineries. They argue
that the focus should be on increasing local capacity and disparage
privatisation merely as an attempt to sell the nation’s patrimony to
well-connected cronies at give-away prices.
Given the
blatant lack of transparency that has characterised previous privatisation
schemes in the recent past, the unions certainly have a point. However, even
they must accept that the current situation is simply too unsustainable to
continue. Government control of the telecommunications industry did not result
in efficiency or cost-effectiveness; the entry of privately-owned
telecommunications companies has turned Nigeria into one of the fastest-growing
performers in the world.
The
logic behind the push for privatisation is impeccable. For at least two
decades, the country has been a living contradiction of an oil-rich country due
to its heavy dependence on imported petroleum products
Government,
too, must get over the unwarranted indecision which has only served to further
complicate things. Former President Umaru Yar’Adua cancelled the sale of
refineries in 2007, after it had been approved by his predecessor, former
President Olusegun Obasanjo. The Jonathan administration initiated a process of
refinery privatisation in December 2013, but it went nowhere. It is to be hoped
that the Buhari administration will succeed where its predecessors have failed.
No comments:
Post a Comment