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Refineries: Diezani Blames Poor Performance on Mismangement

01 May 2012

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Kaduna Refinery

By Chika Amanze-Nwachuku 

Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has blamed abysmal performance of the Nigeria’s refineries on mismanagement by the government.

She also said requisite enabling environment was necessary to attract the desired investment on the downstream petroleum industry, particularly, the refinery.

Alison-Madueke, in a chat with THISDAY in Washington DC, said refinery business was very capital intensive, pointing out that any investor coming into the venture would need to be assured of the requisite returns on investment at the end the day.

She said for Nigeria to achieve sufficiency in refined petroleum products, she would have to increase her refining capacity to a certain level.

It is for this reason, she said the government was trying to ensure equity participation into the refineries as well as gas pipelines.

“The requisite enabling environment is necessary to bring a lot more equity investment into the refineries and other parts of the oil and gas industry and the economy as well. We are also trying to ensure equity participation even in areas such as the gas pipelines and to ensure that over time, areas such as pipelines, tank farms, depots, etc are put in the private sector domain as much as possible. I think that when that happens, as it certainly will, we will find that it will also begin to address some of the issues of transparency and corruption”, she said.
Alison-Madueke said the current subsidy regime has made refining sector unappealing to major investors, pointing out that the nation’s refining capacity had to be boosted in order to stem the flood of importation of refined petroleum products.

She said: “It has been a very topical issue in recent times that being one of the world’s largest producers of crude, Nigeria would be expected to have sufficiency in refined petroleum products at this time. To do that of course, you would have to increase your refining capacity to a certain level”.

She added: “At this time, Nigeria’s petroleum products are subsidised heavily. In fact, that has been the recent discourse  or reason for a major strike in the country, when the country tried to deregulate, take away the subsidy and to help the country to first of all focus these particular natural resources to other parts of the economy, which we felt are much more critical.  And also we didn’t feel the subsidy was actually reaching the section of the population that they were designed for, in the first place; that in fact, they were enriching the middle men in the petroleum industry instead. But  as you will find in many developing countries of third economies particularly in Africa, there is a vicious circle of dependency on the government, it is not just Africa, but in developed countries as well. And so over the years, it became more difficult,  I think in emerging economies to remove dependency particularly, where it concerns major infrastructure and logistics, like in this case”.

The minister argued: “With a subsidised price at the end of the line, it makes your refining sector rather unappealing  to major investors or to major investments. And building refinery is not a cheap venture at all. And anyone coming into the venture will need of course be assured that it was commercially viable. You will make the requisite returns on investment at the end the day. And this is one of the reasons why we try to deregulate to open up the sector to more and more investment.

Tags: Business, World, Featured, Refineries, Diezani, Poor Performance, Mismangement

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