Minister of State for Petroleum and Gas Resources, Dr Ibe Kachikwu, in a stakeholder’s consultive forum on the draft National Gas policy and National Oil policy in Abuja, said that the nation’s refineries may become scrap once Dangote begins processing crude oil at its refinery in Lagos by 2019.
According to him, if the country fails to take urgent steps to revamp the four refineries belonging to the Federal Government, which are in Port Harcourt, Warri and Kaduna, the facilities may be worthless in three years’ time after the Dangote refinery must have come on stream.
He stressed the need to work on the facilities to get it functional as the country has no option anymore.
The minister said, “Refineries will have to work. It is really not an option anymore. And not only should they work, they have to work very quickly. The reality is that if we do not privatise and we do not concede them, which is not what we are doing now, then we have a responsibility to find private capital to get them to where they should be.
“This is because if we do not get them to work, in 2019, I can assure you that if the Dangote system works well, we will have scrap, we won’t have refineries, because by then it will be too late to do anything.”
Kachukwu urged stakeholders to work towards bringing down the cost of production to as low as $18 per barrel from $27 as no decent economy will continue to produce at that amount when there is uncertainty in the price of crude oil, which is constantly fluctuating in the international market.
The minister spoke about the total deregulation of the down stream oil sector.
He said, “At every given time in the history of every country, you will always have partial deregulation. The reason being that you have to catch up each time and make an amendment, and even if it is just one day, you may have some level of subsidy for that one or two days before it is removed.
“What is important is the goal post, where are we headed? Where we are headed is to try and free the industry so that it can do its own rules and set its own prices. There are few mechanics that we still need to get in place properly. We can’t forget the fact that we still have foreign exchange challenges and that income to the government is still very tight.
“You still have to find a way to balance that. But what is important is what the objective is. And the objective is still to fully deregulate.”
Kachikwu also said that Nigeria would exit the Joint Venture Cash Calls before December this year, as more policies and activities are being put in place to enable the petroleum industry run smoothly.
His words, “We have dealt with subsidy removal. We began the process of exiting Joint Venture Cash Call. Hopefully, before December, we will get to a point where Joint Venture Cash Call would be a thing of the past.”