Nigeria will save forex by refining crude oil locally– Ohaeri, PENGASSAN president

A major problem for Nigeria, despite being a  major producer of crude, is the state of the country’s refineries, which have been a drain pipe over the years.

And the president of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Ndukaku Ohaeri, has stated that, until Nigeria changes the ownership structure, like the Nigeria Liqufied Natural Gas (NLNG), where government and private investors have shares, the refineries would never be productive.

As far as the PENGASSAN president is concerned, it has been proved over the years that government is not a good manager of business. He said refining locally would cut down forex on imports of the products, lamenting that Nigeria could earn more by adding value to her crude.

He also highlighted the reason why unemployment may persist despite government’s efforts at job creation, stressing that employment cannot be solved if economy remains the way it is.

The labour leader discussed insecurity, challenges confronting entrepreneurs and labour issues, noting that protesting and shutting down the country may not be out of place, if it will make government to listen to the plight of the people.



Today, as PENGASSAN, we are not just thinking about our members. If I have to gauge it from the point of membership, maybe I can say the security has improved among members. But as I said, it’s not what we want to use to gauge. If my organisation is using more money to put more security measures around me, around my facilities, can I in good conscience say that has translated to national security? Security has become a very big issue but, unfortunately, we have to keep going back to government because that is the only body that has the power to provide security and perhaps that is the major reason for having them in government. I will struggle to say that security has improved. Because if I go by all the news that comes in, things happening at different parts of the country, indeed it would be a struggle to say that security has improved. Moreso there have been a lot of calls for the rejigging of the security apparatus in Nigeria, including our top security chiefs. But the government for reasons known to her has prefferd to keep them. I may not be able to say yes that security has improved. Because if I may have to say yes that means all the reports we are hearing are nothing to write home about. I think we still need to do a lot.

Diversification from oil

It is feasible. It is doable. All other countries of the world have done the same. But the building blocks must be there. You don’t wake up and diversify economy by saying it or by writing it on the table and you think it will happen. The framework must be put it in place. Talk about insecurity, if you want to diversify to tourism for instance, tell me who and who still want to drive from one end of Nigeria to another because you want to be a tourist or you want to look around. After my wedding, some years back, we drove purposely with my wife from Port Harcourt to Enugu, from Enugu to Makurdi to Lafia to Akwanga to Keffi to Abuja for sight seeing. We got to Makurdi, we decided to rest; we got to Abuja, we slept in Abuja for a few days, then Keffi, we entered Jos, we entered Bauchi, we slept in Bauchi at night. The following morning, we woke up and entered the Yankari Games Reserve; and each time we went on the road, we stopped, looked round, just two of us. When we finished, we came to Jos, spent two more nights and then drove way back to Enugu. That was a few years back. Do you think anybody would try that now? Insecurity will automatically be a challenge to tourism. Agriculture, has been the traditional occupation in Nigeria. But today insecurity is another problem. Farmers and herdersmen clash every day. How are you going to diversify the economy? Do you want to go into manufacturing? But you need electricity. So, how do you do it. Do you want to do business, real business? Multiple taxation, different kinds of tax will discourage you, and for people who are already doing business, after some time, they shut down the business and go. These days, people prefer to keep their money in treasury bills, money market, all the markets you can think of, whether it yields profits or not, they want to keep their money there. At least they are sure the money is there and not depreciating. They are running away from the problems we have everywhere. You open one small business, barbing salon, taxes every where. People no longer want to open business. Government must harmonise all these taxes. Where you need to give tax break, give tax break. Power must improve. I pray that this government will be able to sustain the economy. It’s a good vision to diversify, but I know there are building blocks that must be in place.

Youth unemployment

Where do you want to employ the youths, which organisation? This country today, perhaps government is even the highest employer of labour. At least, they put people in the ministries, government agencies, different arms of government. We don’t have business anymore in Nigeria, so where are we going to put people? Even some of these jobs, they are on papers. Let’s go to Dubai, that airport alone, how many people do you think work there? From cleaning the floor, to toilet, to baggage handling to duty-free shops to some other sophisticated jobs, how many people? That airport caters for all the services one can think of. Here, in aviation, how many are we able to employ? Youth unemployment or unemployment generally is not just about this government. I have seen time and time again, whichever government, it must be deliberate. The problem has been there over time. It’s not even what this government can fix. But if there is a path, all we need as a people is to be consistent, whichever party you belong to. We must see it as an important policy. I’ve seen projects that one party commenced and the opposition party continues, you don’t terminate it because it’s for the good of the people. But when you are quick and want to claim the glory, that is where the problem lies. Unemployment cannot be solved if economy is the way it is. If there’s no deliberate effort in putting certain things in place. Security is one issue; the corruption government is fighting today, it is commendable, but the only thing they need to do is to make it better. It’s to be dispassionate with it. They should make sure it’s flat. That way,  security will be ensured, then diversify the economy. Put out this multiple taxation. Lagos port is jammed, but we have other ports  in Nigeria. Lagos should be decongested. That way, employment will also follow. But the politicians will not think in that direction. Employment may be tough if certain building blocks are not put in place. No matter what politicians promise, if you tell me you are going to create one million jobs, you are going to employ one million, where you are going to put them? It’s not about electoral promises. If you tell me, for instance, that you are going to crash the tax, harmonise the taxes, so that this business will grow, it’s going to be systematic. Something that is empiric. You don’t wake up and say we will employ five million people, to put them where? Or you want to employ 10 people to do one job and you are using money to pay all of them, thereby the recurrent expenditure will be 70 per cent, as against capital expenditure. We can’t go anywhere, after four years, we are still where we are.

Feasibility of Nigeria’s refineries

Waiting for Dangote refinery is not the way out totally.  It could be, partially. Over time, it has been proved that government cannot manage business. If people say that government is waiting for Dangote, they may not be too wrong because Dangote is an investor and he’s going to run his refinery very profitably because that’s business. Government owns the refineries in Nigeria and, typical of any government business, especially in this part of the world, it’s run the way it’s run. Ordinarily, if we have the right attitude, we could  perhaps run it better. If you know whom you are, you will run your business in alignment with the way you are and some of the sensitivity around you. Some of the businesses in Nigeria are doing well, then you ask yourself why those businesses are doing well. Are they government-owned wholly? The answer is, no. Then it means there’s something wrong somewhere. I have had to advocate time and time again, apart from PENGASSAN’s position, the refineries, let’s change their ownership structure or model and that will beget an operational model so that people will see these refineries as business. The then Eleme petrochemical, which is now Indorama, is an example. Today, Indorama is making profit. Indorama is also contributing to the development of Nigeria. So, the refineries that we have today, in Port Harcourt, Warri, Kaduna, I think that government should start to think about change in the ownership structure, bring in people who understand this business very well, not the portfolio or the briefcase investors. Bring in experts, those who are reputable in refinery business. If there are issues, let’s sit down and talk about them. Engage the stakeholders and let’s see what and what are the issues, including labour, these are the people working in the industry. That way, these refineries, we can turn them around profitably. We will employ more people, because it’s not just only producing diesel and petroleum. There are other derivatives that we can get out of these refineries.

People have said there have not been queues at fuel stations, but at what cost? We are spending a lot to ensure that there is constant supply. Is it what a nation like Nigeria will continue to do? A country that God has given resources out of the earth. We sell crude and we import refined ones. Common sense shows that when one adds value to a product, you earn more. That is why, today, what’s the exchange rate N360 in average. If we are to refine our products, even if it’s 60 per cent, it will cut down the cost of forex on imports of the products. Today, in the same vein, government has the opportunity to insert in the PIB, that is being worked on, that IOCs, those who are into crude production, should refine certain percentage of thier products in the country. They are happy to take the crude, sell it and don’t bother about the downstream business. And by the time they are coming on stream, government should fully deregulate so that nobody is bothered about how much somebody is selling his products. Then the market forces will set it, then it will be profitable for them to do. If you look at the existing refineries, changing ownership and operating model and how you will bring in new ones, because in the past people were given licences to build refinery, I am sure some of them did not even clear the area or the location and there is no way any of them would have built anything anyway. But today there’s opportunity, not just to force people to refine but you must put things to let them see this is another sides of business that they can explore. But tactically too, as a people because this is the law of the land, you know what the people need and you make laws that will encourage and support the business.