All existing roads must be fixed and guaranteed to last long.
Yesterday's meeting was held between government and the National Administrative Council (NAC) of Labour while today's would be with the National Executive Council (NEC) of the Nigeria Labour Congress (NLC).
Besides Muhtar, were Ministers of Petroleum Resources, Dr. Riwanu Lukman; Labour, Prince Adetokunbo Kayode; Special Adviser to the President on Petroleum Matters, Dr. Emmanuel Egbogha and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Mohammed Barkindo. Leading the NLC team was its President, Abdulwaheed Omar along side three deputy presidents - Peter Adeyemi, Onekolease Erabor, Chief Promise Kanayo Adewusi - President of Academic Staff Union of Universities, Prof. Ukachukwu Awuzie and President of Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFIE), Fred Ojeh.
Lukman allayed the workers' fears when he said that the government has no intention to impose hardship on Nigerians but seeking ways to enhance the quality of their lives.
Barkindo seems to have carried day when he spoke intensively on the woes of the industry, the cabals that inflict pains on Nigerians and the NNPC's lack of power to sanitise the industry.
The present state of the refineries and their management structure, Barkindo declared, would not enable them to meet the nation's demand for fuel.
According to Barkindo, marketers were the cabals behind the current scarcity of petroleum products in some parts of the country.
He accused successive military governments in Nigeria for inadvertently empowering the marketers through uninformed policy decisions to the detriment of the people.
He also lamented that the misplaced and ignorant decisions by the government rail-roaded the NNPC into a "mere toothless bulldog" that could not tame the excesses of "all-powerful marketers, who dictate the pace in the product supply chain."
This was how it all started: "The NNPC's equity holding in all national oil marketing companies such as National, Unipetrol and African Petroleum (AP) were all divested under the 'order from above' by the military government and not a commercial decision by the NNPC. They failed to see the security implication for a national oil company not having presence at the retail end. And since that happened, we became handicapped and the marketers took over and we all remain at their mercies.
"In all the developing countries, their national oil companies operate across the supply chain, including the strategic downstream sector and it is not only seen from commercial perspective but also from national security implications. You cannot handover that sector to a group of people, private individuals, whom you cannot predict their political coloration, cannot predict the decision they may take and the implication of such decision.
"Today, it only needs a text message round the marketing companies that simply says, stop loading in Mosimi for one day and you will see the multiplier effects across the country, from Sokoto to Maiduguri. If they don't load for one day, you will see queues across the country. Why? They have the monopoly over the supply chain. About 15,000 stations in the country are not owned by the NNPC nor are they owned by the Product and Pipeline Marketing Company (PPMC). They are owned by these marketing companies. Once we sell products from the depot, they take over in terms of where they will supply the products."
Barkindo hinted that plans have reached an advanced stage to expand the NNPC mega stations across the country, which now stand at 37 and 12 floating stations. He added that the corporation had taken over 133 stations from independent marketers willing to submit themselves to the NNPC standards.
He said NNPC is targeting about 50 per cent of the market to place itself to check any disruption by the marketers.
Statutorily, the NNPC is empowered to regulate the system and "we are supposed to have our operations, including the refineries, within a commercial framework but got its function wrong when it evolved as an appendage of government and therefore function as a civil service outfit."
The NNPC boss disclosed that a recent audit exercise was a shock. "We took basic data of the four refineries from 1998 to 2008 capacity utilisation and we took international benchmark for that period, meaning we used similar refineries with similar configuration. Now, the international benchmark for capacity utilisation was about 90 per cent but when we came to our refineries, the data showed that within that period, only one year in the 10 years and I think in 2001, that we were able to achieve 66 per cent capacity utilisation. In addition to that, we found that out of these 10 years, for four years, the plants were literarily down. In fact, for the Kaduna and Warri refineries, production was zero."
The study, he said, showed that Nigeria was not refining to maximise the gasoline content of crude, adding that when the data were taken, the average for petrol was 16 per cent and getting more of fuel oil which the country does not need.
"The consequence of this is that we were buying crude at international price of about $70 and when we push the crude into our system, instead of getting the international benchmark, we were getting lower value of the fuel oil that was not needed by our consumers. Unknown to many consumers, that fuel oil is just a bi-product, it is a product that refiners ab inito produce because the cost of production cannot be recovered by producing fuel oil. What the consumers need is gasoline, diesel and kerosene," he said.
Barkindo said the study also examined the root causes of the backward development. He said one of the key issues that emerged was the cost nature of the refineries.
"Because it is a cost centre, the managers in these refineries treat these plants purely as social services. Whether they produce the quantity that is needed by the consumers or not, payment of their salaries is assured. Whether the refineries are operating optimally or not, they are paid because they get the crude free of charge. Unknown to Nigerians, government does not give products free to the NNPC. We pay the Federal Ministry of Finance at international price and this is what they remit to the Federal Allocation Committee to share as revenue monthly. Now, if we are paying for crude at international price and yet we are not able to refine the products that Nigerians require, it means that we are devaluing the value of this crude. This is the difficulty that the NNPC encounters sometimes when it cannot pay the international price into the Federation Account."
He also blamed the inability to distribute products to the incessant vandalism of the pipelines. The non-functional refineries have been a drain on resources as their workers and other logistics are kept and serviced even without any work and added value to the system, Barkindo said, adding that the shut inability to guarantee supply to the refineries culminated in the massive importation of refined products into the country.
The NNPC chief said to ensure steady supply of products, government had to establish the Petroleum Support Fund (PSF) in 2006 to compensate marketers, who were importing at international prices but selling at regulated prices.
He described the refineries' managers as "glorified managers" who had no power to function.
"They were glorified managers, until recently when the President stepped in to increase their approval limits, for instance the manager of Kaduna Refinery, who sits atop of a $5 billion investment could not spend more than N5 million. Even for his consumables, he requires millions of dollars but he had to come to Abuja to get such approval. The worrying thing is that these approvals have to go to the Federal Executive Council (FEC). With due respect, I don't know how many of our ministers that have come near a refinery before let alone to appreciate the quantum of work that is needed. The normal time for Turn Around Maintenance (TAM) is done once between 18 and 24 months but we ran ours for several years without doing it. Even as a manager, he could not hire or fire workers under him."
Thereafter, the Labour leaders took turn to express fears not about deregulation per se, but how the proceeds of that would enhance the living conditions of Nigerians.
Adewusi said infrastructure should be built first instead of the government pushing for deregulation.
Omar said the forum, which continues today, was an avenue for dialogue, adding that the government line of argument would be subjected to debate when the NEC of the Congress meets soon.
