By Magnus Onyibe
The reality that there was no job loss, rather more jobs have been created when the banking, telecommunications and electricity sectors were opened up for private sector participation should be proof of evidence to the labor leaders that their members jobs would not be threatened when the moribund refineries are sold.
The universal dictum: government has no business being in business is instructive in the resolution of the current energy bind in which our country’s leadership and follower-ship find themselves.
It is needless rehashing the fact that government is inefficient owing to the bureaucratic bottlenecks that governance in the public sector entails.
Such complex processes associated with government are not suitable for the operation of the business of refining petroleum products which is quite complex owing to the interplay of man and intricate machineries driven by high technology.
As such,operating an oil refinery requires a lot of nimbleness and agility in decision making for optimum outcomes/outputs.
Besides the challenge of inability to be swift in decision making that stops the wheel of progress from turning accordingly in government,there is also the issue of the goal in the operations of government,which is quite distinct from that of business.
Basically,the objective of government is to organize and protect citizens in a society, community or country for progress and society. And it does so by getting the people to comply with the principles of rule of law which both the leaders and the led must respect. That is because adherence to the rule of law is the guardrail for the enthronement and enforcement of law and order for the betterment of all stake holders in a society,community or country and also for the legitimacy of government.
What the above narrative implies is that government is not driven by efficiency and speed,but by its ability to provide equity and justice for citizens as well as respect for governance codes and ethos to facilitate good citizenship for the greater good of all members of society,community or country.
As John Locke wrote,the purpose of government is: “to secure and protect the God-given inalienable natural rights of the people “
Amongst other roles, government essentially provides the legal and social framework within which the economy operates. What that means is that government is not a business operator beyond providing level playing field for business organizations in order to manage competition in the market place.
That is quite unlike the forces that drive business,which is that firms thrive on competition against similar service providers to gain market edge and by so doing,add value to society.
But without competition,such as the situation that used to obtain in Nigeria whereby government had been the sole investor in oil/ gas refining as far back as when oil was discovered in Oloibiri, modern day Bayelsa in 1956 ,a monopoly was created with the consequence of value not being created.
That is the unfortunate situation in which Nigeria had been wallowing before the Petroleum Industry Act,PIA came into force last year and which has been followed by President Tinubu’s tenure commencement speech on 29 May that ended petrol subsidy.
Before then,the monopoly of the federal government in oil/gas business had been a sort of albatross hovering over government.
Contrary to the goals of government,the ultimate objective of any business is to fulfill the needs and wants of members of society while making profit.
In some cases,especially with respect to the large corporations,social content may be a driving force because remaining in business by maintaining their operations for the sustenance of the lives of those that they provide employment and pay wages and salaries,can be a significant factor.
Taking into consideration the narrative above ,and given that one of the key demands by the organized labor in Nigeria(Nigerian Labor Congress,NLC and Trade Union Congress,TUC ) is that president Bola Ahmed Tinubu should give a timeline within which the government owned refineries in Portharcourt and Warri would go back into production,one can not help but conclude that the demand is ridiculous,simply because it is a settled dictum that government has no business in business.
The assertion above is underscored by the fact that the preconditions for calling off the strike action that they had called on 2nd day of August with a view to getting the administration to reverse the second (2nd) increase in the pump price of petrol which is a definitive pronouncement by President Tinubu on the time line for government owned and operated refineries to go back into production is antithetical to the letter and spirit of the Petroleum Industry Act,PIA which is geared towards the promotion of government divestment from the oil sector.
In light of the earlier stated fact,which is that government has no business being in business,the demand that the moribund state owned refineries should be repaired and put back into service ,would be deemed by any right thinking business savvy and 21st century progress conscious leader as a ridiculous demand.
The facts below further justify the assertion above,as l believe that the colossal financial loss incurred in the management of the refineries affirm the dictum that government has no business in business.
Take for instance the report of a panel set up by the House of Representatives,HoRs of the 9th assembly that had revealed that a total cost of rehabilitating the refineries from 2010 to 2020 is N11,349,583,186,313.40,while the additional costs in other currencies are $592,976,050, €4,877,068.47 and £3,455,656.93.
When added together, the total sum of financial cost would be in the neighborhood of between fifteen to twenty trillion naira.
The very vocal civil society advocacy group, Socio-Economic Rights and Accountability Project,SERAP,also tracked the expenditures on the repairs of refineries between 2015 to 2020 (five years period)under the watch of the immediate past President,Mohammadu Buhari and contended that:
“About N82.82 billion was reportedly spent in 2015; N78.95 billion in 2016; N604.127 billion in 2017; N426.66 billion in 2019; -N218.18 billion in 2019, and N64.534 billion expenditure was recorded from January to June 2020.”
That is not all.
The NNPC annual financial reports for 2018 showed that all the the refineries’ operating deficits increased by 39% compared to 2017.
In the 2018 trading year, the Port Harcourt Refinery posted a loss of N59.96 billion, Warri Refinery posted an N41.71 billion loss, and Kaduna Refinery recorded an N31 billion loss.
That is not inclusive of the current rehabilitation efforts that commenced in 2021 which is costing Nigeria additional $1.5 billion for the Port Harcourt refinery and $1.4 billion for Warri and Kaduna refineries.
What the above reality reveals is that roughly $3 billion has been committed towards the turnaround maintenance of the three refineries from 2021 till date.
Under pressure from organized labor, President Tinubu has promised that PortHarcourt refinery would come on stream in December this year.
It is relieving that Mr President created a lee way for government to wriggle out, basically because he did not commit to the labor leaders on whether the refinery would be operated by government,a concessioner or sold outright-which is the ideal thing to do if the current concept of government not having business with business were to be taken to heart.
The reason that it is wise that President Tinubu did not promise NLC and TUC leadership that the refineries would be managed by government even when PortHarcourt refinery is reopened in December is rooted in the fact that, despite the monumental financial costs that been applied in fixing the refineries from 2010-2020 ,not up to 30 percent of the capacity of the refineries in was realizable until the turn around maintenance commenced in 2021.
As evidenced by the colossal losses in the operation of the refineries earlier highlighted,it has been proven beyond reasonable doubt that government is a very poor manager of business.
So,it is preposterous that organized labor is calling for the return to status quo antebellum by demanding that a date be given for the reopening of the refineries.
Imagine if the mind boggling sums expended in the maintenance of the ailing refineries which is akin to trying to revive dead horses between 2010 and 2020,and the amount spent on refurbishing the same refineries that is ongoing were to be availed major players in the oil and gas sectors as government’s equity investment in the manner that South Korea in the 1990s invested in the chaebols such as Samsung,Hyundai,LG etc which metamorphosed into national and global icons?
There is no doubt that the narrative about Nigeria’s oil/gas sector would change from that of misfortune to prosperity,if the full letter and spirit of the PIA are allowed to be applied to the fullest.
Magnus Onyibe sent this piece from Lagos, Nigeria.
