Illegal refineries as a challenge

2010-02-22
THE PUNCH Newspaper


Occasional press statements by the spokesmen of the Joint Task Force in the Niger Delta indicate that illegal crude oil processing facilities and their operators have become the primary targets of combat operations in that part of the country. Over 600 of such facilities were destroyed by the military outfit between October and December 2009, but more have sprouted in different locations in the region, causing what JTF Commander, Major-General Sarkin Yaki Bello, has described as “very serious concern.”

The existence of those contraptions is clearly undesirable, given that their operators obtain the crude oil they process by vandalising pipelines belonging to oil prospecting companies. That is oil theft – hurtful to both oil firms and government, and, by extension, the national economy. Besides, a lot of oil is discharged into the physical environment – land and water bodies – because of the crude facilities and methods used in the processing operations.

By smashing up the “illegal refineries,” the JTF is fulfilling part of its mandate, which revolves around protection of strategic oil and gas installations and containment of misguided militancy in the Niger Delta. Environmental degradation is also being checked. All the same, government needs to face up to some bitter truths.

Nigeria’s decade-long dependence on imports for as much as 80 per cent of its fuel requirements is symptomatic of lack of initiative. The general feeling among the populace is that government, as presently constituted, is uncommitted to enhancing onshore refining capacity and adequacy of fuel supplies. Lawbreakers engaged in illegal processing of crude are thus exploiting weaknesses in service delivery by government and the fact that imported fuel, with its cost structure, is far too expensive and unaffordable to most transporters who operate in the rural areas of the Niger Delta.

So, much as it should be conceded that the JTF is doing a good job locating and destroying “illegal refineries,’ government stands culpable – and deserves condemnation – for creating the conditions that have fostered such nefarious activities.

That Nigeria, a major oil producing country, spends as much as US$8 billion yearly on fuel importation, as recently disclosed by the Nigerian National Petroleum Corporation, has the very clear implication that the country’s economic planners are either ill-tutored or criminally reckless in wastage of scarce economic resources. Operators of the “illegal refineries” and government are guilty of economic crimes against Nigeria and its people.

One unfortunate reality in these circumstances is that while it is so very obvious that “illegal refineries” would disappear once the NNPC’s processing plants attain optimum efficiency, there is little in the attitude of the corporation’s management or the Presidency to assure Nigerians that the said plants would ever be meaningfully rehabilitated or that new ones could be built. Adequate supplies would shrink the “parallel” market operated by the illegal refiners because consumers are aware of the poor quality of fuel sourced from those contraptions.

What must be borne in mind by the authorities is that the technology employed in the “illegal refineries” could prove beneficial to this country if research institutes are encouraged to undertake a thorough analysis of the processes with a view to improving same. It is common knowledge that secessionist Biafra successfully refined crude oil for its fuel requirements during the 30-month Civil War. Unfortunately, the Federal Government failed to appreciate the need to study and improve on the technology. The Government has also made impossible the emergence of private refineries in the downstream oil sector.

Illegal refineries are, therefore, a challenge that the government must deal with to establish itself as focused and goal-driven. For too long, the systemic dysfunction that has left our populace without such critical utilities has equally propelled some who are enterprising or who believe they are ingenious to try out means of satisfying societal needs and making their own fortunes.

The severe shortfall in supplies must be addressed by selling off the nation’s decrepit refineries and encouraging the immediate take-off of private refineries. Incentives are necessary to attract private investors to the petroleum downstream, especially for crude oil processing. Until the huge demand for fuel in the rural areas of the Niger Delta is met by availability from the official sources, the JTF might have an uphill task battling to eliminate the “illegal refineries.”

 

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