FG Sets Three-year Deadline to Reduce Equity in NNPC’s Refineries
Chineme Okafor in Abuja
The federal government has disclosed that it would in the next three years, tactically cut down its overall equity share in the three of the oil refineries operated by the Nigerian National Petroleum Corporation (NNPC).
The government stated this in the new Economic Recovery and Growth Plan (ERGP) document, which President Muhammadu Buhari, recently launched in Abuja to aid Nigeria recovery from economic recession.
According to it, far-reaching reforms would be initiated in the country’s oil and gas industry, especially in line with the ‘7 Big Wins’ roadmap that was earlier initiated by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, and also launched by Buhari.
Buhari had reportedly refused to yield to the proposal that government should wind down its equity interests in the refineries which productivities have remained extremely poor, and allow private investors take up shares to revamp their operations.
The government had consistently maintained that it would not privatise the refineries, but would only invite private investors to invest in its revamp and operations on agreed shared business terms.
But listing the key activities that would be done in oil and gas section of ERGP, the government explained that it would revamp refineries to increase local production capacity and gradually reduce its shares in them.
It said it would: “Strategically reduce government equity in NNPC refineries and other downstream subsidiaries such as pipelines and depots, conclude downstream liberalisation, implement new business models for refineries, revamp refineries to increase capacity utilisation, encourage private-sector participation through co-location and JV arrangements, and work with the National Assembly to ensure passage of the PIB (Petroleum Industry Bill).”
The government as well noted that it would transform Nigeria’s gas sector by launching development projects that could increase gas production in the country.
In this regards, it stated that it would: “Accelerate the building of critical pipeline infrastructure like Obiafu-Obrikom-Oben pipeline (OB3), Trans Nigeria Gas Pipeline, Escravos Lagos pipeline system (ELPS)II), finalise gas production sharing contract terms, implement the seven key gas development projects to ramp up domestic supply, and roll out the LPG (liquefied petroleum gas) Penetration Programme.”
On governance of the oil sector, it explained that it would get its ministries of petroleum resources, justice, internal affairs and justice amongst others to: “Review policy and regulation including the National Oil Policy, National Gas Policy, Downstream Policy Fiscal Reform Policy, and Petroleum Industry Reform Bill.”
It added that it would: “Improve the business environment and investment drive in the areas of accelerated income streams, upstream, midstream, and downstream.”
Further on gas development, it said it would continue its promotion of domestic utilisation of LPG and compressed natural gas (CNG), while reducing gas flaring.
Implementation of gas commercial framework and increasing gas to power, Improving Niger Delta security, implementing capacity building and economic empowerment initiatives in the Niger Delta, as well as increasing transparency and efficiency through information communication technology (ICT) and other systems automation for performance management would equally be part of the government’s plans for the oil sector in the ERGP.