On Monday  Nigeria withdrew the licenses awarded to 18 companies to set up oil refineries, five years after the companies failed to commence work. The licenses have expired; they are not forever, so the Energy Minister has canceled them. Nigeria handed licenses to 18 companies, mostly locals, in 2002 to build private oil refineries in a major restructuring of the country's downstream petroleum sector launched by the government to boost domestic supply of petroleum products. Nothing has been done or achieved. Nigeria, OPEC sixth largest exporter, currently has four oil refineries that are managed by NNPC. The plants have suffered from years of neglect and poor management and can meet just about 20% of the nation's fuel demand estimated at 40 million litres per day.

The rest is bought in at world prices, through fuel dealers related by blood or amity to the current inhabitant of Aso Rock. Fuel, even at 150 Naira is in short supply. The turnaround maintenance underperformed by Emeka Offor, at great expense, has been a disaster. It is an absurd situation, with Venezuelan crude imported to Kaduna for refining while Nigeria exports 2.5 million barrels a day. The SIR refinery in Abidjan is thriving, not only because it has an increasing supply of domestic oil, but also because it is the refinery of choice for the bunkerers of the Delta. Now that the election is coming, the Nigerian government is thinking of actually building new refineries. It may well be too late.

 The African Refiners Association (ARA) held its second general meeting in Cape Town this week. The leadership spelled out the bad news. There is a veritable tsunami of oil products shortly to hit Africa from new refineries in Asia and the Middle East. Up to 50 million metric tons of refined product - or 78 percent of the annual consumption of the 48 sub-Saharan countries in Africa - is expected to be added to the world market by 2010. With Africa being one target, the imports could end up causing the shutdown of some of the continent’s refineries. There are 38 refineries in Africa. When one looks at installed capacity of these refineries, one can see a combined rated output of 68 million tons for an African consumption of 65 million tons. Theoretically, the supply should meet the demand. Unfortunately, there are certain refineries which are woefully underperforming – mainly in Nigeria. This will bring in external suppliers.

 It is known that there is a capacity of fifty million tons of refining which is already built in the Persian Gulf and on the West coast of India; not far from Africa. The threat is that these large refineries subsidized by their governments will deliver their products at very low prices and below the production costs. They have the crude and need to move the refined product. As these refineries begin their deliveries to Africa it will be uneconomic for Africa (e.g. Nigeria) to actually build refineries. It will be far cheaper to buy in the refined products. Nigeria has missed the boat.

 The greed and incompetence of the Nigerian oil magnates has condemned Nigeria to continued fuel vulnerability for the forseeable future.

 “The leech that does not let go even when it is filled, dies on the dry land”

Robot  # 1 | 23.03.2007 09:41

On Monday...Read the full article.

akuluouno  # 2 | 23.03.2007 10:35

Behold Villagers, The die has indeed been cast. We thought our oil will finish, I did not know that strategic oil managers had a more bitter surprise in store for us. Thank you Dr Busch for making it abundantly clear. The implication of this is that NNPC ( Never Never Produce Crude) can now relax and forget about either refurbishing, building or even awarding licenses for the construction of oil refineries. Of course they will be happy because all those related to our father and his cronies by blood ( gbenga), DNA (iyabo)or genes (uba sani and El rufai etc), adopted (nanmdi Uba), by looks ( ezekwesili), can now go ahead and import since the latter is cheaper than building a new refinery. What are the implications? Better imagined than seen. Nunc Dimitis to all downstream oil activity along with the multiplier effects for the economy including the critical issue of employment for the army of unemployed young men and women. Most importantly will be Nigeria's continued total dependence on imported refined oil products, high cost of generating power by PHCN, gradual loss of the knowledge and capacity to refine oil over time etc etc. Nigeria is indeed in the same mire as one Ozo title holder from my village who took the ozo name of "ifeonyemeluonweya" literally translated as "what you did to your self". :mad: :mad: :sad: :sad: :sad: :cry: :cry:

Kelechi  # 3 | 23.03.2007 10:49

With oil installations, companies and their workers presently targets of militants, no sane and responsible local or foreign investor will want to set up a refinery in Nigeria. That simply will not make a good business sense. However, revoking or withdrawing the said license will ensure that politicians in government during the coming political dispensation will be compensated with licenses to import. In a corrupt Nigerian way - that makes sense; abi I lie?

ajis15  # 4 | 23.03.2007 10:51

Is there anybody out there with knowledge of how this thing work, and can give us a rebuttal or another perspective to Dr. Busch? The picture painted here is scary. It is sad. Obasanjo wasted years.

What?  # 5 | 23.03.2007 11:11

Not one of the several Nigerian newspapers and magazines claiming to crusade for justice have touched this story past pointing at Emeka Offor. The so-called "guerrila" journalists are shooting out stories with unverifiable documents and titillating bits about the girlfriends of Aso Rock instead of doing real investigations. Crusaders my boot, they are either looking for brown envelopes or doing their master's bidding. Thank you Dr Busch for raising the issue of this pink elephant in the living room.

truthsayer33  # 6 | 23.03.2007 12:18

greed and incompetence what a combination....simply put but forensically incisive about the Nigerian condition.....oh for the day we can have just greed and competence like the rest of the world. we were promised inquiries into all those plane crashes,so where are the reports?we were promised an effective ministry of tourism...what happened?

oluye  # 7 | 23.03.2007 13:19

Before we begin to politicise this issue there is a question we must honestly answer: When the licenses were awarded in good faith, was it on the condition that they would expire if unused in five years? If that was the condition, the development should not be seen as the machination of any corrupt official(s) rather this article should be seen as the work of blackmailers. The companies have no option but to re-apply if they are still interested.

Ebe  # 8 | 23.03.2007 14:34

When some of us were suggesting the construction of new refineries and the refurbishing of existing ones as the panacea to the fuel supply crisis and perennial scarcity, some folks here said deregulation and the removal of subsidy would magically rectify the situation. Five or six years later, deregulation has occurred and the subsidy is gone, and there's still fuel scarcity and we're still importing almost all of our refined petroleum products. And now the government wants to build new refineries? What a shame! They should first apologize to Nigerians for listening to those who suggested textbook, theoretical solutions to practical problems.

Palamedes  # 9 | 23.03.2007 16:03

Nigeria may have missed the boat--assuming there was ever a boat waiting. No one should blame the 18 licensee: They probably started in good faith but ran into the brick walls of globalisation. There is little or nothing they can do if no one would sell them the technology to build the refineries? I must qualify what I have just said by adding that it is also possible for multinationals to win a contract and seat on it (with no intention of honouring it), to protect their investment elsewhere. The big multinationals, owners of many of the world refineries are creating scarcity in the world market by failing to build new refineries (even in the USA), but they don’t stop there, they use their influence to stop others from doing so by denial of technology. To beat globalisation, Nigeria must so do clandestinely—like Iran and her nuclear project. Closer to home, there is a band of perpetual importers (cement, rice, flour, fuel etc.) of goods that they could help to produce in Nigeria. And I would like to see the EFCC investigate anyone who has been importing the aforementioned goods for more than a decade. I strongly believe that these big importers have a hand in the running down of local facilities or/and blocking projects that would have reduced reliance on foreign imports of these goods.

nero africanus  # 10 | 23.03.2007 16:36

=Kelechi;163228>With oil installations, companies and their workers presently targets of militants, no sane and responsible local or foreign investor will want to set up a refinery in Nigeria. That simply will not make a good business sense. However, revoking or withdrawing the said license will ensure that politicians in government during the coming political dispensation will be compensated with licenses to import. In a corrupt Nigerian way - that makes sense; abi I lie? kelechi, please maybe you want to write what we can all read , my sight isnt so good

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