Yar’Adua orders building of new refineries • Says oil caused Nigeria’s woes

Soji-Eze Fagbemi and Ayodele Adesanmi, Abuja
Friday, September 12, 2008
TO solve the incessant increase in the prices of petroleum products, President Umaru Yar’Adua has given a directive that new refineries should be constructed.





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Minister of State for Energy in charge of Petroleum, Mr. Odein Ajumogobia, disclosed this on Thursday, even as he told the Senate Committee on Petroleum Resources (Downstream) that the Federal Government would require N1 trillion to subsidise petroleum products.

Mr. Ajumogobia, speaking at a public hearing organised by the committee on “Alarming Increase in the Prices of Kerosene and Diesel,” said the Federal Government was now set to commence the building of new refineries to permanently solve the problems of fuel scarcity and fuel price increase.

He stated that President Yar’Adua had directed that “high power refineries and petrochemical industries should be built to address the incessant increase in petroleum products prices.

“President Yar’Adua has directed that more refineries should be built to solve the problem of petroleum products price increase,” adding that the president gave the directive because the government was handicapped in controlling the situation in the sector due to the alleged unwholesome practices of those licensed to build refineries as well as those licensed to import kerosene.

“The Federal Government is set to commence building more new refineries. Those who won the previous licences issued are not interested in building refineries. The government is handicapped on the issue of kerosene.

“Petroleum sector had been deregulated, but those licensed to import fuel to the country prefer to import aviation fuel because it is more profitable. The allocation to import kerosene is therefore diverted to import aviation fuel.

“Our local refineries are not working, even if working and operating at optimal capacity, it cannot be enough. We still need to import 40 per cent to meet local consumption,” the minister said.

Already, Mr. Ajumogobia said the government had spent N500 billion on fuel subsidy this year adding that this would increase to N800 billion before the end of the year.

When the minister was probed further on the need to subsidise diesel by the committee, he stated that this would require N1 trillion before the end of the year.

He, however, explained that with the Federal Government’s commitment to improve power generation, demand for diesel by industries would reduce, adding that once there was improvement in power supply, there would be less dependence on diesel.

The minister stated that the market prices were what was obtainable in the international market, explaining that the price of crude oil which was $139 in July was now $99 per barrel, adding that this might have negative effects on the budget which was predicated on a fixed price.

The Senate President, Senator David Mark, said the National Assembly must provide the needed framework that would further help government’s efforts at achieving a virile energy sector.

He pointed out that the executive arm was putting together a comprehensive Petroleum Sector Reform Bill, which would be brought to National Assembly for consideration very soon, saying that the Senate would treat it with dispatch while making sure that it meets the aspirations of Nigerians.

Also, President Yar’Adua on Thursday said that discovery of oil in Nigeria had fuelled corruption and bad governance. The president noted that “fifty years after we started exporting oil in commercial quantities, we are yet to diversify our economy satisfactorily, provide requisite physical infrastructure, and develop our human capital adequately. Rather, oil seems to fuel corruption and bad governance”

Yar’Adua who spoke at the opening ceremony of the West Africa EITI Conference, said that his administration had resolved to reverse the trend as a result of which the government initiated a package of anti-corruption and governance reforms.

He added that the resolve informed the ongoing reform in the petroleum sector, which he said was a natural thing to do “because it was in tandem with our reform and developmental agenda” The president, who was represented by Vice President Goodluck Jonathan, stated that “our commitment to institutional and structural reform in all facets of our national life is informed by the imperative to create the enabling environment for us to deliver on our seven-point agenda and our social contract with the Nigerian people.”

Today, he said, Nigeria had attained the status of one of the leading EITI-implementation countries in the world. The Nigeria Extractive Industries Transparency Initiative, (NEITI), according to him, had succeeded in putting both the supervising government agencies and oil companies on their toes and ensuring that transactions were done in line with due process.

He explained that it was not surprising that Nigeria was one of the first countries to sign on to and implement EITI, promising that before the end of the year, “Nigeria would formally pass the EITI validation test and move up to the status of a compliant country.”


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