Uchenna Izundu
OGJ International Editor
LONDON, Mar. 2 -- Nigeria plans to sell its four refineries to raise money, as falling oil prices have left the country's budget deficit worsened.
Nigeria's export revenues rely almost wholly on the oil industry, and it has had to reconsider its spending plans as oil prices have dropped more than 60% from their July 2008 high of $147/bbl.
Petroleum Minister Rilwanu Lukman said the Presidential Steering Committee made the proposal. It is responsible for reducing the impact of the global financial crisis on Nigeria.
Another action is to remove fuel subsidies on gasoline and other petroleum products, which cost the country 640 billion naira ($4.4 billion) last year.
The subsidy removal has been strongly resisted by trade unions who have described it as ill-advised and endangering the economy. John Odah, general secretary of the Nigeria Labor Congress, said it was "shocking" that the government had announced the plans after indicating 3 days earlier that it was willing to consult on the issues. Odah said that when most countries were pulling back from market fundamentalism, "government is allowing itself to be goaded and stampeded into adopting ideologically driven policies, adding, "These policies will in the long-run wreak the welfare of Nigerians and the economy's capacity to compete."
The refineries, which have a total capacity of 445,000 b/d, are at Kaduna in the north, Warri in the south, and two at Port Harcourt.
"We are not going to give them away, but we are making sure that whoever buys into our refineries will run them efficiently," said finance minister Mansur Muhtar.
This is not the first time that Nigeria has tried to sell its state refineries. In 2007 protests and a labor strike ended the last attempt by former President Olesegun Obasanjo after allegations of cronyism and dirt-cheap prices. Poor maintenance and power shortages have stopped the refineries from being run at full capacity, leaving Nigeria with the absurd result of importing 85% of its petroleum products. Warri's refinery is the only operating one with 125,000 b/d, but it is not operating at full capacity.
State-owned Nigeria National Petroleum Corp. is carrying out a maintenance program on the 110,00 b/d Kaduna refinery, which is expected to be completed by the end of March.
Last week, Mohammed Barkindo, the group managing director of NNPC, described the Kaduna refinery as strategic. "It is the only refinery we have in the northern part of the country which supplies products to the 19 states of the north. And therefore, it is very important for consumers that this refinery functions very well to produce the products that are required."
Contact Uchenna Izundu at [email protected].