Ifeanyi Ubah is a Senator of the Federal Republic of Nigeria. He chairs a number of committees in the upper legislative chamber, including the Senate Committee on Petroleum (Downstream), Ad Hoc Committee on Turnaround Maintenance of the Refineries; and the Joint Committee on Crude Oil Theft. He spoke with journalists on the sidelines of the just-concluded Offshore Technology Conference (OTC), in Houston, Texas, U.S.A., concerning sundry issues being handled by his committees especially the knotty subjects of oil theft, and fuel scarcity, as captured by Clara Nwachukwu, Managing Editor, Sustainable Economy Nigeria. Excerpts:
In view of the challenges the downstream sector has been facing, especially regarding fuel scarcity, is your committee happy with how the government is handling the issues?
Well, the point is about trying to regulate the downstream and lack of investment in the sector. It’s not been easy. But I believe that the present government has taken a big step towards addressing many of them.
We are talking about refineries that have been in total comatose for close to a decade. If you look at our refineries, the last turnaround was about 10-15 years ago.
If you look at the downstream sector, because of non-deregulation, everybody depends on the NNPC. No country can survive by only a single entity importing everything, but we also have to have a reform in our financial services sector so that even if we sell the crude, we can be able to import.
Because we are solely dependent on the exportation of crude oil, as a source of revenue for foreign exchange (forex), it has not been easy, and we are now addressing the issues.
So, what I am proposing is that the government should come with a very laudable position to ginger the establishment of modular refineries that can produce fuels for the country and use the downstream players to operate and own them. If we do that, it will become a very big step.
Why am I saying this? If you have 200 downstream players, you can divide them into tens or 15 to one modular refinery to become shareholders. They will bring in the best men to manage them. So, whatever they produce can be used to support your downstream operations.
This will bring in more money for the government. So, the government needs to take a big leap to invest in these modular refineries. While the likes of Dangote will continue to grow bigger and operate alongside the modular refineries. But if we don’t do that, we will still put this industry into the hands of a single operator that will continue to monopolize the sector, and it is not good for the country.
If we are using about 450,000 barrels of crude and use it to support our indigenous modular refineries and also other refineries, there won’t be need for importation of the finished products.
And nobody will tell you, yes; if you allow me to run alone, I’m going to crash prices. Nobody does that. Everybody wants to maximize profit. The only thing that will crash prices is competition. If you have like 8 or 10 modular refineries competing and you can use between $300 and $500 million to set up one and the owners can recoup their investment within a period of 5 to 10 years and pay back the government, that will work.
So, let the government support indigenous players, who have shown capacity in the industry to set up modular refineries, and that is the solution. There is nothing anybody can tell you in this industry today that can be better than what I have just told you.
The problem in Nigeria is that everybody is afraid of government policy. But if we use money from local content, and from gas funds and others to invest in modular refineries, Nigeria will become independent, self-reliant, in terms of production of petroleum products.
You are the Chairman of the Senate Committee on Turnaround Maintenance of the Refineries, despite everything said and done, the refineries are still not working and there is scarcity of petroleum products across the country. What is happening with the refineries, are they not better off being sold?
On the turnaround maintenance of the refineries, I am sure by the grace of God, by my involvement, before the end of the year, two of the three refineries will start working. I am 100% sure of that. And then before the end of next year, the last refinery will come on stream as well.
In fact, they will start producing products like jet fuel, lubricants and others before the middle of next year.
So, I am of the opinion that we should give room and give support to the administration of the President and see how he can move the country forward.
On refineries’ sale, selling is not a problem. But there is a problem in Nigeria today, in terms of sales because people always assume that it’s being given to a selected few. So, the first step the government needs to take is to get all the players in the industry and match them. You pick players from the North, South, East and West or the six geo-political zones, and let them hold a stake in holding companies. You can create about 5-10 holding companies and loans as a sovereign guarantee and get us to start owning our own assets. That is what the government can do.
Once we are able to do that, we will regulate ourselves, we know there is competition. Some players will start firing on production, others on building filling stations; some will go into transportation to set up trucks and even invest in rail coaches that can take my product from point A to B. Some people will start doing many other things in the downstream. And by so doing, we know that if the government is giving me money for a modular refinery, let me use my money to set up filling stations and other things. That is how a country can develop.
If you have focus and say: okay, there are 10 players in this space, let’s form an alliance. They will go and bring the best handlers and the best managers, the best of everything to manage the facilities because what you are after is the dividend, whatever comes out of it.
So, till we get there; but I am very sure we are getting there because what is most important is the people in authority to advise the government and government to do what they have been advised on. Not people that will come and advise the government to monopolize and try to say give me alone.
So, I think the agenda of Mr. President is good, and he is trying his best. Let us watch before the end of the year if the two refineries work, then you will give me kudos. Because I will continue to be on them and make sure that everything that is said will be implemented before the end of the year.
We are really working very hard to see that we do something that Nigerians will be very proud of.
From your Committee’s assessment of the refineries, do you think the refineries will truly come on stream because Nigerians are sceptical since we have been saying the same thing for too long?
That is why I said that we have set up a technical team that is almost visiting the refineries every two weeks to make sure that our refineries work, because it is a mandate that was given to me, and I have to deliver on them because I have a name to protect.
As the chair of the Joint Committee on Crude Oil theft, what is your team doing in helping the government solve this seemingly intractable issue of oil theft and pipeline vandalism?
In the next few weeks, you will see us holding public hearings in about nine states of the Federation, so that we will be able to ascertain from the locals, hear from the locals and know from them what the problem is.
Why are they missing the opportunity of having direct products because of the vandalism. So, we will create this awareness that the government is really looking into how we are going to first and foremost get Nigerian crude oil production to move up and how we are going to solve the problem of production shut-in.
The challenges in terms of pipeline vandalism and all these things from the perspectives of the Nigerian Civil Defence, Nigerian Army, Nigerian Navy, the Police and other security agencies and the NNPC.
So, it’s going to be a holistic public hearing, which will allow 2-3 weeks. We will use the media to disseminate information about what we want to do.
But believe me, we are really working very hard to see that under my tenure as the Joint Chairman on Oil Theft and Chairman Ad hoc Committee on Turnaround Maintenance, and Chairman, Downstream, we are going to do something that Nigerians will be very proud of.
What about the issues of conflicting figures on crude oil production and daily fuel consumption?
Well, these are things that I would not want to preempt my committees. I want these to be what we are going to discuss during our public hearing, because so many issues will come up, but if I start talking about it now, it looks as if I already know the score.
What is the conviction that you want to give Nigerians about the seriousness of your Committees?
Under my watch as the Chairman of the Downstream Committee, the issue of scarcity of petroleum products will be addressed very well. You can see how we are battling with scarcity at the moment. We are going to change the narrative in the next few weeks if not possible, or in the next few months. Let me just leave it like that.
But as somebody who has been an operator, as somebody who understands the industry, I know what to do, and I know where to go and cross the T’s and dot the I’s and make sure that we maximize the potential of a lot of people who are in the industry.
Also, in a situation where you have to look at the plight of the people, you may not want to hit the hammer hard; as you know, half-bread is better than none. That is my own assessment till I get down to the roots. I just assumed office about three months ago.
We are going to advise the government on some of these issues from a legislative perspective and then give them a clue of what we have seen especially as we are about to go into public hearing in about nine states, where we are going to interact with some of these commanders, officers, etc. to know what they are doing. Let us hear from the locals and have people bring information to us, telling us what is happening in every state.
And then we ask the people that are supposed to be the eyes of government, the law enforcement agencies. We ask them questions and then we take it from there.
