PETROAN, ‘Abiku Refineries’ and the Consolation of Collapse

A sector that retains reviving what has repeatedly failed, whereas resisting what works, is just not trapped by destiny however comforted by collapse. PETROAN’s newest outburst exposes simply how invested some pursuits stay in Nigeria’s ritualised dysfunction.

By Abiodun Alade

Nigeria’s oil and gasoline sector has endured many seasons of noise masquerading as advocacy. Sometimes, stress is utilized not in pursuit of reform, however in defence of habits which have outlived their usefulness. The most recent episode is revealing not as a result of it’s novel, however as a result of it exposes, with uncommon readability, the discomfort of hire searching for intermediaries when real change threatens acquainted margins.

That discomfort has not too long ago discovered expression within the agitation by the Petroleum Merchandise Retail Shops Homeowners Affiliation of Nigeria over feedback made by Bayo Ojulari, Group Chief Government Officer of the Nigerian Nationwide Petroleum Firm Restricted. In demanding his resignation, PETROAN has inadvertently illuminated a deeper drawback in Nigeria’s petroleum political financial system: the resistance of entrenched intermediaries to reform that narrows the area for straightforward hire.

Ojulari’s offence was not misconduct. It was candour. He noticed, appropriately, that the Dangote Petroleum Refinery has supplied respiration area at a time when authorities owned refineries are shut, and that the NNPC mustn’t rush again into the acquainted ritual of pouring hundreds of thousands of {dollars} into turnaround upkeep for amenities which have grow to be monuments to waste. This isn’t heresy. It’s prudence.

For 1 / 4 of a century, Nigeria has chased the mirage of refinery rehabilitation. Public data recommend that between $18 billion and $25 billion has been spent on turnaround upkeep and rehabilitation of the 4 state owned refineries, with little to indicate for it. Just like the abiku of Yoruba lore, these refineries are revived with ceremony, solely to relapse nearly instantly. Working immediately, dying tomorrow. To insist that this cycle should proceed, no matter proof, is just not patriotism. It’s sabotage dressed as concern.

PETROAN’s response is due to this fact instructive. In a latest assertion, its spokesman,  Joseph Obele, described it as “most worrisome” that there was no urgency to restart the Port Harcourt Refinery as a result of Dangote is assembly present gas wants. The affiliation went additional, threatening to foyer civil society teams and pursue authorized choices to power the removing of the NNPC GCEO ought to the refinery not resume operations by March 1. This isn’t coverage engagement. It’s stress politics.

Why would a physique of shops, whose enterprise mannequin relies upon largely on shopping for and reselling merchandise refined elsewhere, be so hostile to home refining capability? The reply lies in incentives. Home refineries compress margins. They cut back arbitrage. They expose inefficiencies that thrive in shortage. For many years, gas importation and the dysfunction it inspired created area for unearned earnings throughout the worth chain. Native refining threatens that association.

Historical past affords a helpful parallel. In Mancur Olson’s traditional work The Logic of Collective Motion, he explains how small, organised curiosity teams usually prevail over the broader public curiosity as a result of they’re higher motivated to defend slender beneficial properties. PETROAN’s conduct suits this sample. It speaks loudly, usually, and with confidence, however for whom does it actually converse?

Additionally it is price recalling PETROAN’s posture throughout earlier durations of misery within the sector. At moments when the nationwide oil firm was accumulating unsustainable obligations, remitting little or nothing to the Federation Account and absorbing huge prices, commendations flowed freely. Laurels had been dished out even because the system bled. That period ended with the Federal Authorities writing off substantial money owed, together with about $1.42 billion and N5.57 trillion after reconciliation. Nigerians paid the worth for that indulgence.

In the course of the years when Nigeria’s petroleum sector was pushed to the brink, PETROAN seemed the opposite method. The report is obvious. The nationwide oil firm captured the whole worth chain, seizing crude exports, monopolising refined product imports, after which forcing the Federal Authorities to borrow an estimated N500 billion month-to-month to maintain opaque subsidy claims. By controlling practically 90 per cent of the roughly $3 billion in month-to-month crude proceeds routed by way of the Central Financial institution, and mixing this with subsidy funds and different shocks, fiscal area collapsed, driving the federal government into large Methods and Means financing.

On the identical time, refinery rehabilitation grew to become an business with out output. About $10 billion was spent over a decade on upkeep with nothing to indicate for it, not even a litre of petrol. An extra $3 billion was later securitised towards future crude gross sales for one more failed restore cycle, a sum that might have delivered dozens of modular refineries. Even after the Petroleum Business Act prioritised Home Crude Obligation, compliance remained elusive, whereas Nigeria continued to burn scarce overseas trade importing sub normal gas right into a system with no practical midstream. These weren’t marginal errors however a enterprise mannequin that plunged the nation into disaster. All through all of it, PETROAN’s voice was conspicuously muted, beneficiant with reward the place scrutiny was required.

For this reason the present agitation rings hole. Reform at all times unsettles those that prospered below dysfunction. President Bola Tinubu’s administration has signalled, by way of phrases and choices, that it intends to interrupt with the outdated script. Ojulari’s mandate at NNPC is obvious: business self-discipline, effectivity and profitability. That mandate can’t be reconciled with infinite rehabilitation theatre.

There may be one other uncomfortable query PETROAN has not answered. What worth does its management deliver to the petroleum sector past tv appearances and press statements? Severe enterprise management is measured in belongings constructed, jobs created and worth added. Publicly obtainable info means that among the firms related to PETROAN’s management are modest in scale, with restricted undertaking footprints. Allegations and controversies reported within the public area round a few of these entities, whether or not within the energy metering area or elsewhere, solely reinforce the necessity for warning in elevating ethical authority. Maybe PETROAN’s members would do nicely to look at the data of those that converse of their title, earlier than an affiliation meant to characterize many is lowered to the personal property of some, and recast as an adversary of the general public curiosity.

This isn’t to say that retailers haven’t any position in coverage debate. They do. However affect have to be earned by way of perception, integrity and alignment with the nationwide curiosity. Threats and ultimatums betray a insecurity in argument.

Nigeria stands at a fork within the street. One path leads again to ritualised waste, institutional failure and the consolation of acquainted inefficiencies. The opposite results in native capability, competitors and a petroleum business that lastly works for Nigerians. The Dangote Refinery is just not a silver bullet, however it’s a sign that the outdated excuses are dropping credibility.

PETROAN’s nuisance worth thrives solely when reformers flinch. President Tinubu has proven little urge for food for reasonable blackmail. Ojulari enjoys his confidence for a cause. The duty earlier than NNPC is simply too necessary to be derailed by these nostalgic for a damaged system. If PETROAN needs to be related on this new period, it should evolve from noise to nuance. In any other case, historical past will bear in mind it not as a defender of customers, however as a footnote in Nigeria’s lengthy battle to flee the tyranny of waste.

Abiodun, a communications specialist writes from Lagos