Chineme Okafor in Abuja
The International Institute for Petroleum Energy Law and Policy (IIPELP) has said Nigeria would refine up to 1.3 million barrels of crude oil daily (mbpd) by 2023 to meet the fuel demand of her growing population.
IIPELP, an energy law and policy think-tank disclosed this in its recent policy analysis and brief on the government’s review of operations in the country’s downstream, which saw it increase petrol pump price.
The policy brief was obtained by THISDAY in Abuja. It contained amongst other things, the Institute’s support for the government decision on the downstream sector, but called for deeper policy thrusts.
It said at the country’s current crude oil production level, such demand would be huge on the country, hence, the need for proactive policy measures to avert possible instances of energy crisis.
“In IIPELP’s analysis, by 2023, given the current rate of growth, Nigeria’s refining capacity would have to grow to 1.3 million barrels of oil per day which currently exceeds government entitlement crude under current fiscal arrangements.
“This means that Nigeria would need to import crude to feed potentially an expanded refinery capacity or compel its partners’ entitlement crude to be delivered to the domestic market,” said the institute in the brief.
It explained its choice to support government’s recent move in the downstream sector saying: “IIPELP welcomes the move by the federal government, though belatedly, to restore some semblance of macro-economic stability in the country.
“Going by the latest news of a possible devaluation of the currency, these steps would enable sound economic management and encourage genuine investors.”
It further said: “The removal of subsidy or shall we say, the adjustment of petroleum products prices to reflect an exchange rate closer to reality should allow for the country to be served by oil companies other than NNPC.
IIPELP has always believed that the way to reform the petroleum sector or any other sector is to incentivise supply and this can only be done when there are potentially, multiple sources of that supply and investment decisions can be made on a sound economic basis.”
The Institute added that between 2010 and 2014, Nigeria spent in excess of ₦7 trillion on a subsidy programme it said was widely fraudulent.
It added: “In the process, the country exhausted its “excess crude account” and increased domestic borrowing from ₦4trillion as at 2010 to ₦11 trillion as at end of the year 2014.”
Subsidy in Nigeria, it explained represented the largest wealth transfer scheme from the poor to the wealthy ever invented.
It said in its advice to the government on the best way to manage the process: “It is trite that the liberalisation of the downstream petroleum sector is both a necessary and sufficient condition for Nigeria’s economic development.
“However, it is apt to state here that this policy has had a track record of success in countries where there is economic transparency, fiscal discipline and consolidation.”
“IIPELP’s position is that this decision of the government will be akin to “chasing shadows” if these policies are introduced, as they have, without a complementary emphasis on fiscal discipline and strong institutional governance.
“Worthy of note is the fact that fiscal discipline goes beyond simply fighting corruption activities by past leaders in the country, this is only a part of it. A good fiscal discipline framework should and must be non-partisan,” it added.