16 April 2019

Nigeria: Our Plan Was to Build Five Export-Oriented Refineries, Says Gowon

Former Military Head of State, General Yakubu Gowon, yesterday said his administration had planned to build five export-oriented refineries to prevent dependence on other countries for refined products.

"The three refineries, Port Harcourt, Warri and Kaduna, were designed for internal consumption. We had planned that if our consumption grew more than the three could do, we would transfer one of the export-oriented refineries for home consumption," he told participants at the second yearly international conference and exhibition of the Oil and Gas Trainers Association of Nigeria (OGTAN) in Lagos.

Gowon, who was the chairman of the event, expressed hope that "with the modular refinery scheme, things will improve and we won't have to be importing fuel and exporting crude abroad to be refined, considering the refined products come here with all the subsidies as well as the problems such practice is creating. I hope that will now solve the problem."

On why the Federal Government would not remove fuel subsidy anytime soon, Minister of State for Petroleum Resources, Dr Ibe Kachikwu, said a decision would require caution because of Nigeria's "unique situation." He said: "You can see the reaction from NUPENG, PENGASSAN and others. There is a lot of anti-populism against that. Any president that is going to take that decision will have to weigh all the factors."He also dismissed the fear of a looming fuel scarcity, following cases of panic buying at the weekend.

According to him, "the situation was just a logistics issue. The reserve they have is enough for 28 days. The one in Warri was also due to vessel logistics, as they have 15 vessels already. If you go around today, there is nothing as such. You will sometimes have occasional difficulties with logistics. What is important is taking immediate action and addressing the situation promptly. There is no basis for panic buying."

On his part, the president of OGTAN, Dr Mayowa Afe, called for better strategies to harness human capital opportunities in the country, adding that the Local Content Act has aided the growth of the oil and gas sector.

Meanwhile, the nation's oil and gas infrastructure gap, expected to gulp about N18 trillion ($50 billion), might drastically decline given a reduction of over 15 months in contract circle.The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Maikanti Baru, disclosed at the 12th Nigerian Association for Energy Economics (NAEE) Annual International Conference yesterday in Abuja that contracting circle in the sector has dropped from over two years to nine months.

This followed unsucessful attempts by the Federal Government to close the infrastructure gap in the sector, especially for pipelines, refineries and storage facilities, among others. Kachikwu had said the Federal Government would cut the contracting cycle in the country's oil and gas industry from over two years to six months.

According to experts, the length of time it takes most contracts to be adequately executed remains a critical challenge to the nation's oil sector, thereby affecting government's revenue and employment.With the prevailing situation, Baru said: "We have reduced the contracting cycle for upstream operations to nine months from an average of 24. Our target is to achieve less than six months, and strategies are being put in place to actualise this."

While the outgoing president of the Nigerian Association for Energy Economics (NAEE), Wunmi Iledare, faulted the Federal Government over the continuous payment of subsidy, Baru, who was represented by the Chief Operating Officer of NNPC Ventures, Dr Victor Adeniran, argued that improved infrastructure development in the sector enabled the nation to beat petrol queues, which surfaced at the weekend.

Baru disclosed at the event, which focused on 'Energy Efficiency and Access Imperatives for Sustainable Development in Emerging Economies,' that the corporation has negotiated settlement of the pre-2016 Joint Venture cash call arrears owed international oil companies and has repaid over $1.5 billon out of the $5.1 billon cash call arrears to date.

"It was quite fulfilling that in 2018, that's for the second year in a row, we concluded the fiscal year without any cash call arrears," he said.Also at the event, Iledare announced that the association has elected the Attorney General and Commissioner of Justice, Edo State Ministry of Justice, Yinka Omorogbe, as its new president.

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