The Federal Government says it is meeting with relevant government agencies to support the activities of artisanal local refinery operators in the country.
Sen. Ita Enang, the Senior Special Assistant to the President on Niger Delta Affairs, said this in a resolution passed after a meeting he had with the management of key line agencies in Abuja.
The resolution was titled: “Background on the Resolution for the Engagement of Local or Illegal or Artisanal or Modular Refineries to Produce or Refine Petroleum Products for Local Consumption in Nigeria’’.
Enang said the federal government was aware of the activities of the operators.
“We admit that a large quantum of petroleum products and other bye products are produced or refined and circulated by the operators of local or `Illegal’ or artisanal or modular or `puu fire’ refineries operating in the Niger Delta states with camps extending to Anambra, Kogi, Lagos and indeed most states where the crude oil pipelines of NNPC traverse.
“We are conscious that the crude taken are from the NNPC official products irregularly obtained without payment to the Federal Government with attendant revenue loss to the NNPC and indeed the Federal Government of Nigeria.
“We are also aware that the operators of these refineries are improving in the quality of products they refine and sell to the public.’’
The presidential aide, however, regretted the resultant pollution of the environment by the indiscriminate disposal of refining bye products and the need to regulate the production processes to integrate environmental standards and authorities to production process.
Enang said that the federal government spent approximately N1.5 trillion on subsidy in 2019 because these products were imported under the landing cost which funds would have been channelled to capital projects.
“The price of crude oil has drastically dropped to the twenties dollar per barrel.
“There will be great cost and incidentals, get them refined abroad and ship back to Nigeria paying another shipping and landing, agencies and incidental cost, including subsidies.
“Whereas, with crashed cheap price of crude oil, Nigeria will not have enough revenue from crude sales of any batter arrangement to sustain the subsidy regime currently operating.
“However, the import of refined petroleum products, indeed petrol in particular, has more cost element of marine transportation, Nigeria Maritime Administration and Safety Agency (NIMASA) charges, and indeed other charges relating to maritime transportation,’’ he said.
According to him, the pricing template released by the Petroleum Products Pricing Regulatory Agency (PPPRA) detailing the indexes used to arrive at price on N123 per litre.
On comparative analysis of the size and implication of the loose to the country’s current dwindling revenue profile, Enang said NEITI renewed its appeal to the government to curb oil theft to reduce budget deficits and external borrowing.
He quoted NEITI report as saying “what the country lost in 20 months in fiscal terms is enough to finance the proposed budget deficit for 2020.
“It is 15 months to cover total proposed borrowing on increase capital budget by 100 per cent and in five months to cover pensions, gratuities and retirees’ benefits for 2020.
“Whereas, if the mega refineries were not even in operation, Nigeria would have been saved the losses which come from other revenues of the federation.
“However, experts have asserted that so long as import and subsidy operates, our mega refineries may never work as it is more profitable for operations to import, gaining from subsidy paid”.
In addition, he said most of the countries from whom we import refined products are health/pandemic challenged and they have shut or scaled down operations.
“They have shut or scaled down operations and even the vessel carrying the import may come with pandemic challenged crew members which may further complicate our domestic health problems.
“Whereas it is more profitable and economically viable to diverse and build our local refining capacity, as we do not even have enough market for our export crude to yield revenue for us to sustain import at this level.’’
Enang, however, said he had met previously with operators of the domestic “Illegal” or “Puu fire” refineries with the security agencies and escalated to higher authority and had convened a meeting with management of nine key line agencies.
Meanwhile, he said some of the recommendations of the meeting included a directive to artisanal refinery operators across the country to form cooperative societies to enable them source funds from the Government, Corporate organisations and Banks.
The meeting recommended that government of the respective states would be brought on board on this matter and multi-sectoral federal government team will inspect each of the locations for the purpose of ascertaining their suitability.
It added that the PTDF and Federal University of Technology, Effurun, as well as the Department of Petroleum Engineering, Ahmadu Bello University, operating the modular refinery would provide and avail each of the model operators, technical expertise.
This, it said, would be for the purpose of assuring safe operations as well as guaranteeing quality and standard of each product refined.
It said the integration of local refiners was necessary in view of the economic and health challenges of countries hitherto refining and exporting products to Nigeria, global economic realities and paucity of fund to sustain subsidy payment.