‘Petrol queues, power failure’ll persist without adequate pricing’

The Federal Government on Tuesday declared that it was important
for the country to address issues surrounding the pricing of
petroleum products and gas if Nigeria must overcome the challenges
in the supply of petrol, power and gas.

It also stated that in attempting to fix the right price for
petrol or any other commodity in the oil and gas sector, caution
must be applied to ensure that citizens were not made to suffer
unduly.

The Minister of State for Petroleum Resources, Ibe Kachikwu, who
stated this at the ongoing Nigeria International Petroleum Summit
in Abuja, said until the country addressed the pricing issue in the
sector, fixing the existing refineries and encouraging private
investors to build new ones would not solve the downstream
problems.

The minister stated, “Ultimately, the greater challenge that
this country would have and still has is that of pricing. Everybody
wants power, available gas and freely delivered fuel with no
queues, but people are not willing to make the sacrifices that are
essential for these things to happen.

“Sometimes, it is a pricing issue. We have got to get to a point
where we’ve got to deal with some of these issues in a manner that
doesn’t hurt our people but at the same time create the level of
efficiency as to remove arbitrages and patronages that are inbuilt
in them.”

Kachikwu told international guests at the event that Nigeria’s
refineries should be ready within 18 months, but stated that
without adequate pricing, the plants would not solve the country’s
petrol supply challenges.

“Refineries and local production are key. We expect a 12 to
18-month corridor of construction and hopefully, at that point, we
will get our refineries back. However, if we get the refineries
back by 2019, does that solve the problem? No, it doesn’t. You
still have to deal with the pricing issues, because nobody is going
to build a refinery and sell products at a loss,” he added.

The minister stated that the Federal Government would be setting
parameters and incentives for building of refineries.

This, according to him, will ensure that a typical producer,
especially the small level producers, are able to see enough
incentives to be able to get some of their products refined
in-county as well as being exported.

“That is the major policy directive. There are going to be
incentives for those who are doing the major practical investments
in the refineries, for example. There are not dearth of
opportunities in this country. I do not know of any country with
the vast opportunities that Nigeria possesses,” Kachikwu said.

The minister continued his argument that there was no reason why
oil companies would do their business in Nigeria and take 100 per
cent of the crude oil produced out of Nigeria.

He stated, “What are they doing with it? They are going to take
it to refineries; they are going to crack them somewhere. If there
are incentives for them to crack them here, they will do so.
Ultimately, Nigeria must aim to be the refining corridor for the
whole of Africa. That is becoming very critical.

“If we do all that concerning the planned investments in
refineries, my position is that the business has got to change. It
has got to change to taking your crude oil and being able to
refine. It has got to change to be a major player in the power
sector. It is got to change from oil to gas and to clean energy. We
have got to look into moving incentives away from oil, back into
gas and back into cleaner energy.”

The Federal Government on Tuesday declared that it was important
for the country to address issues surrounding the pricing of
petroleum products and gas if Nigeria must overcome the challenges
in the supply of petrol, power and gas.

It also stated that in attempting to fix the right price for
petrol or any other commodity in the oil and gas sector, caution
must be applied to ensure that citizens were not made to suffer
unduly.

The Minister of State for Petroleum Resources, Ibe Kachikwu, who
stated this at the ongoing Nigeria International Petroleum Summit
in Abuja, said until the country addressed the pricing issue in the
sector, fixing the existing refineries and encouraging private
investors to build new ones would not solve the downstream
problems.

The minister stated, “Ultimately, the greater challenge that
this country would have and still has is that of pricing. Everybody
wants power, available gas and freely delivered fuel with no
queues, but people are not willing to make the sacrifices that are
essential for these things to happen.

“Sometimes, it is a pricing issue. We have got to get to a point
where we’ve got to deal with some of these issues in a manner that
doesn’t hurt our people but at the same time create the level of
efficiency as to remove arbitrages and patronages that are inbuilt
in them.”

Kachikwu told international guests at the event that Nigeria’s
refineries should be ready within 18 months, but stated that
without adequate pricing, the plants would not solve the country’s
petrol supply challenges.

“Refineries and local production are key. We expect a 12 to
18-month corridor of construction and hopefully, at that point, we
will get our refineries back. However, if we get the refineries
back by 2019, does that solve the problem? No, it doesn’t. You
still have to deal with the pricing issues, because nobody is going
to build a refinery and sell products at a loss,” he added.

The minister stated that the Federal Government would be setting
parameters and incentives for building of refineries.

This, according to him, will ensure that a typical producer,
especially the small level producers, are able to see enough
incentives to be able to get some of their products refined
in-county as well as being exported.

“That is the major policy directive. There are going to be
incentives for those who are doing the major practical investments
in the refineries, for example. There are not dearth of
opportunities in this country. I do not know of any country with
the vast opportunities that Nigeria possesses,” Kachikwu said.

The minister continued his argument that there was no reason why
oil companies would do their business in Nigeria and take 100 per
cent of the crude oil produced out of Nigeria.

He stated, “What are they doing with it? They are going to take
it to refineries; they are going to crack them somewhere. If there
are incentives for them to crack them here, they will do so.
Ultimately, Nigeria must aim to be the refining corridor for the
whole of Africa. That is becoming very critical.

“If we do all that concerning the planned investments in
refineries, my position is that the business has got to change. It
has got to change to taking your crude oil and being able to
refine. It has got to change to be a major player in the power
sector. It is got to change from oil to gas and to clean energy. We
have got to look into moving incentives away from oil, back into
gas and back into cleaner energy.”