Nigeria should remove subsidy.

The call for removal of fuel subsidy on premium motor spirit (pms), otherwise called petrol, was again brought to limelight when some experts reinstated the call for removal of subsidy which they claimed would free up resources, free the market, attract investors and bring competition and efficiency into the downstream sector.

A former Group General Manager, Corporate Services, Nigerian National Petroleum Corporation (NNPC), Engr. Babajide Soyode, who was also a former General Manager of Warri and Port Harcourt refineries, told the Tribune that he was a pioneer staff member of the Port Harcourt and Warri refineries. He said he understands roles played by indigenous engineers to build and maintain the three refineries but blamed lack of political will to maximize the refineries, for their sub-optimal performance these days.

According to him, “I was part of those that pioneered operations of refineries in Nigeria. We need more of private refineries in Nigeria. If Nigeria really wants to get out the mess it finds itself in the downstream sector, it must remove subsidy. When you remove subsidy, you open up the sector for more competition. You take one product and subsidize it, which is gasoline (petrol), at the expense of education, infrastructure, health, security and so on.

“What you ask yourself is, how many people are using gasoline. About five million car owners, out of about 200 million people. It doesn’t make sense. I want to tell you that if subsidy is removed, infact, you have more competition.”

He, however, stressed that fuel subsidy is actually being implemented in Lagos and Abuja alone while marketers in other parts of the country sell at their preferred and different prices.

“In any case, subsidy is only for Lagos and Abuja. If you go to the interior, they will tell you ‘this is our price, take it or leave it, you can go and look for NNPC gas station.

Why should government pretend that it is not subsidizing that it is the NNPC that is subsidizing. Does that make sense? Who owns NNPC?

“Is it not government and in the end, we (Nigerians). So who is kidding who? Why not just remove subsidy and let government go away from subsidy business. Infact, it is a shame and embarrassing that our government with all myriads of challenges we have like restructuring, herdsmen, they are talking about about subsidy of gasoline. It is really embarrassing,” he said.

On the proposed Nigeria -Niger refinery, he stated that it is a welcome development.

According to him, “Why not? You can get crude from Niger and use it to supply the markets there. You see, in building a refinery, the first thing you consider is market for your products. For example, it may shock you, the most valuable refinery in Nigeria today is Kaduna refinery.

“It has no competition. I will just build a pipeline and take crude oil there and I can distribute to all that population in the north. Any other product that wants to challenge me will have to come by trucks from Port Harcourt, from Warri or from Dangote refineries. But I’m right there in the middle of the nation.

“Another thing you ask yourself is that why do people buy your crude and take to America, India and others. It is because those refineries are there. It is cheaper for you to take crude oil in a vessel to those refineries, refine and convert it to 30 to 40 different products, that’s why.

Is Kaduna refinery efficient now? No. Is Warri refinery efficient now? No. Is Port Harcourt refinery efficient now? No. Are they junks? No. So it depends on what you want to do with them.

“Those refineries (Kaduna, Warri and Port Harcourt) are among the newest in the world. If you look at the stock of the refineries, you will realise they are one of the newest. And you know what, they are hardly used. So you still have distinct value in them. There are things we called ‘upgrading’. That is modernization of technology. Don’t forget, all those refineries you see are just metals. They don’t rust but it is what is inside that when you modernise by changing them, they become new.

“You can have 300 year old building, what you do is leave the shell and convert what you see inside into anything. However, the thing is that when you upgrade, you spend about 50 per cent of the cost of building a new one.

So let’s remove subsidy, everything will come into shape.”

On proposed building of more depots by the NNPC when the existing 21 depots seem moribund and less effective, Soyode defended the action proposal by suggesting that the management of the NNPC must have taken the decision in the best interest of the nation.

“I will assume as reasonable businessmen, they will have done their studies. If you have more depots strategically, it reduces the cost of distribution and this is why in the 1970s, the military government decided to establish depots and pipelines.

“People say NNPC refineries are bad but there is one thing: all three refineries are in the best market location possible. So if somebody can invest and turn them around and upgrade them, they have best marketing locations. So if you have pipelines linking all of them and depots, it is cheaper. You can imagine the alternative which is trucks running up and down our roads,” he said.