Nigeria's reforms

Nigerian leader Gen. Abdulsalam Abubakar appears set to dissolve the brutal and corrupt regime set up by his predecessor, Gen. Sani Abacha. He has reportedly promised no more human rights abuses will occur and that pro-democracy activists jailed by Abacha will be tried in civil courts and not by military tribunal, as the previous dictator planned. Abubakar has even promised democratic elections, but, then again, so did Abacha. More concretely, he is planning a shake-up of state firm Nigerian

Oct. 5, 1998

3 min read

David Knott
London
[email protected]

Nigerian leader Gen. Abdulsalam Abubakar appears set to dissolve the brutal and corrupt regime set up by his predecessor, Gen. Sani Abacha.

He has reportedly promised no more human rights abuses will occur and that pro-democracy activists jailed by Abacha will be tried in civil courts and not by military tribunal, as the previous dictator planned.

Abubakar has even promised democratic elections, but, then again, so did Abacha. More concretely, he is planning a shake-up of state firm Nigerian National Petroleum Corp. (NNPC) and has increased aid to oil-producing regions.

Tayo Akpata, secretary of Nigeria's Petroleum (Special) Trust Fund-created in 1994 to channel petroleum revenues into social programs-recently accused NNPC and the government of neglecting Nigeria's refineries. Akpata said that Nigeria's four refineries, which have combined capacity of 445,000 b/d, are either in poor shape or with maintenance work only partly completed.

He said the government's pricing policy needs reviewing. The price of gasoline was last raised in October 1994, but the current price of 13¢/l. had been "overtaken by events."

Mobil plea

Mobil Oil Nigeria Ltd. joined the debate, urging government to deregulate the downstream sector to retain investor interest.

Daniel Debreuilly, chairman and managing director of Mobil Oil Nigeria, said the government should give priority to refurbishing refineries, storage depots, jetties, and pipelines.

NNPC operates a 110,000 b/d refinery plant at Kaduna in northern Nigeria, which was built in 1980 and is currently undergoing turnaround maintenance by France's Total.

It also runs: a 125,000 b/d plant at Warri in the southwest, built in 1978 and currently producing at about 70% of installed capacity; a 60,000 b/d plant at Port Harcourt, in the southeast, built in 1965 but shut down in 1996 after major malfunctions; and a 150,000 b/d plant, also at Port Harcourt, built in 1989 and operating at about 72% of installed capacity.

Imports reliance

Nigeria relies heavily on imported petroleum products, because its four refineries cannot meet local demand.

Debreuilly blamed inadequate stocks of products and thin profit margins left to retailers for the poor profitability of Mobil and other marketers in 1996-97.

Under the pricing formula, the petroleum trust fund takes more than 6¢ for every liter of fuel sold, while NNPC takes about 4¢, and retailers are left with about 1¢/l.

"We can no longer sustain the investment required to remain in the retail business," Debreuilly warned. "We remain very concerned with low capacity utilization by our major customers, who are suffering from lower demand levels for their products. This knock-on effect in the economy needs to be corrected urgently."

Debreuilly commended the government for abolishing the excise duty, computerizing customs clearance of goods, and promising to open up all sectors of the economy to private investment.

He said that when these policies, proposed in the government's 1998 budget, are implemented, Nigeria's economy would improve significantly.