EXITING PETROLEUM SUBSIDY: ENSURING SELF-SUFFICIENCY IN DOMESTIC REFINING OF PETROLEUM PRODUCTS
SPONSOR: Sen Rose Oko
Co- Sponsors: Sen. Sam Ominyi Egwu
Sen. Ayo Akinyelure
Sen. Gabriel Suswan
Sen. Akon Eyakenyi
Sen. Ibrahim Oloriegbe
Sen. Micheal Nnachi
Sen. Francis Alimikhena
Sen. Olabunmi Adetunmmbi
Sen. Sadiq Suleiman Umar
Sen. Chimaroke Nnamani
Sen. Christopher Ekpenyong
Sen. Ezenwa Onyewuchi
Sen. Ibikunle Amosun
Sen. Aliyu Wamakko
Sen. Abubakar Shehu Tambuwal
Sen. Bayo Osinowo
Sen. Akwasiki Godiya
Sen. Godfrey Utazi
Sen. Robert Boroffice
Sen. Adamu .M. Bulkachuwa
Sen. George Sekibo
Sen. Sahabi Yau
Sen. Aisha Dahiru
Sen. Oluremi Tinubu
Sen. Enyinnaya Abaribe
Sen. Alkah Saidu
Sen. Mohammad Aliero
Sen. Geshom Bassey
Sen. Isa Shuaibu Lau
Sen. Laah Danjuma
Sen. yusuf Abubakar Yusuf
Sen. Philip Aduda
Sen. James Manager
Sen. Clifford Ordia
Sen. Oninna .J.Ogba
Sen. Albert Bassey
Sen. Stella Odua
Sen. Betty Apiafi
Sen. Uche Ekunife
Sen. Matthew .A.Urhoghide
Sen. Orji Uzor Kalu
Sen. Ifeanyi Ubah
The SenateNotes that although Nigeria produces 1.7m barrels of crude per day, its moribund refineries have very little refining capacity and imports roughly 90 per cent of its fuel, negating much of the benefits oil-producing nations accrue from high crude prices;
Further notes that according to Petroleum Products Pricing and Regulatory Agency, PPPRA, and Nigerian National Petroleum Corporation, NNPC, between 2006 (when the Petroleum Support Fund, PSF, was set up) and 2018, at least N10 trillion has been spent on petrol import subsidy – while the Senate in May 2019 criticised the payment of N11 Trillion to oil marketers as subsidy in the last six years as it (the Senate) also approved the payment of additional N129 Billion subsidy claims to 67 petroleum marketers;
Aware that even though the President removed subsidy in May 2016 amid falling crude oil price and an economic recession, more than $160 million was spent on subsidy in early 2017 as the national oil company absorbed costs due to an increase in crude oil price.;
Also Aware that although Nigeria introduced petroleum subsidies in the 1980s as a temporary measure aimed at strengthening the local refining industry and improving product affordability and domestic consumption, it has however become a permanent feature of our economic life and has not only continued unabated, but has sky rocketed over the years as successive administrations have failed to make Nigeria self-sufficient in domestic production of refined petroleum products;
Further aware that research by the Council on Foreign Relation’s Program on Energy Security and Climate Change has shown that in countries where subsidies account for a substantial portion of government budgets or national GDP, they can be fiscally debilitating and economically damaging. For instance, when subsidies constrain government budgets, they can displace necessary public investment in critical infrastructures and the confluence of fuel subsidies and state ownership in the energy sector often results in corruption, smuggling, and the emergence of black markets;
Notes that the NNPC has four major refineries with a combined installed capacity of 445,000 barrels per day and despite the huge resources expended on Turn Around Maintenance, none of the four refineries currently works up to 50 per cent of their capacity according to official figures from the NNPC;
Further Notes that despite promises and plans by government to bridge shortages in downstream infrastructure and specifically fix Nigeria's moribund refineries and make them work to optimal capacity by 2019, the former Oil Minister admitted while speaking last year in Lagos at the 18th edition of the International Biennial Health Safety and Environmental (HSE) Conference on the oil and gas industry in Nigeria that those plans will not materialise until 2020 when Dangote Petrochemical refinery's 650,000 barrels per day, Nigeria's four refineries of 450,000bpd capacity and three modular refineries come on stream;
Also Notes that in an exclusive interview with the Guardian Newspaper in May 2019, the Senior Technical Adviser to the erstwhile Minister of Petroleum on Refineries and Downstream Infrastructure disclosed that about 43 refineries, including large scale and modular refineries have been granted licenses to refine petroleum products across the country; that two of those modular refineries would be inaugurated soon in the Niger Delta region.
Cognizance of the fact that the overriding objective of modular refineries is to overcome the huge capital requirement that impedes the establishment and maintenance of large-scale refineries thereby ensuring self-sufficiency in the production and supply of petroleum products;
Worried that according to Business Day Newspaper reports based on data obtained from the Department of Petroleum Resources’ website, a total of potential 633,000 barrels per day refining capacity has already been lost due to the expiry of licenses of both conventional and modular refinery projects;
Disturbed that despite the dire need to exit petroleum importation/subsidy and boost local refining capacity to reduce the current 91% exposure to petrol importation, there is neither a comprehensive plan/roadmap to that end and for mobilizing technical and financial aid for refinery license holders to ensure refineries under construction become operational, nor proactive information system on the status of existing refineries and licenses as well as details of subsidy payments. An open data principle would undoubtedly enhance transparency and accountability and ultimately build trust between citizens and government;
Accordingly Resolves to: 1. Mandate an Ad Hoc Committee to invite the Minister/Minister of state for Petroleum and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) to brief the Committee on the status of existing refineries including private and modular refineries and licenses; provide a robust plan/roadmap for exiting importation of refined petroleum products and payment of subsidy; and, apprise the Committee on a plan for domestic refining with specific timeframes.
2. Report back to the Senate in eight weeks.
No comments:
Post a Comment