Nigeria’s oil and gas industry represents a larger chunk of the country’s foreign exchange earnings making it, the country’s most reliable source of revenue earnings.
The oil and gas sector of the economy broadly divided into three independent categories -downstream, mid-stream and upstream has over the years remained a great support to the fulcrum of the countries domestic needs despite the challenges.
Despite the strategic nature of the downstream sector to the oil and gas industry, the neglect by government and policy makers in finding a lasting solution to the pockets of problems confronting players in that industry continues to impact rather negatively on the efficiency and general output of stakeholders.
Given the nature of the downstream sector, it is difficult to neglect any part of the operational chain. Hence, operations are expected to be seamless to ensure efficient delivery.
The most challenging problem of the sector, includes among other things the country’s inability to refine petroleum products domestically owning to the state of the refineries considered dead and abandoned.
This inability to refine crude in the country means that to meet local consumption, that is local demand, the crude is exported, thereby piling pressure on the ailing economy. As a result, the downstream sector becomes vulnerable to foreign exchange volatility which has become a norm since the refineries has been left to operate below their capacities.
Speaking on the apparent challenges of the sector, Mr. Jide Afolabi, a seasoned stakeholder, and one of the trailblazers in the sector, CEO of NEPAS Group (a leading Company in the Design, Engineering, Construction and Maintenance of Facilities, Plants and Terminals in Nigeria), and founder of Marine Diesel Supplier Association of Nigeria (MADSAN), Mr. Jide Afolabi recounted the endless list of recurring problems the sector faces.
According to him, “it is disheartening that the sector has not shown a remarkable efforts to get the refineries back on track, because it looked as if they all hands tool leaving the working refineries working below it’s full capacity at a less than 30.0%. With a reported $1.6bn spent on reviving and maintaining the obsolete infrastructure since 1999.”
He lamented the difficulties encountered by members of MADSAN on the sea while freighting crude products.
“Another sore point -which was even what in the first place gave birth to the formation of MADSAN- was to challenge and find a lasting solution to the incessant problems encountered on the sea by members. Diesel freighters must be given adequate protection and support rather than mitigating their efficiency on the sea,” he said.
Afolabi further concluded that, “finding a solution to the challenges we have in the downstream, the government must stop the trial of various strategies and focus on what works. The crude oil swap they introduced to ensure sustained supply of the refined petroleum products seems to have failed. And now the NNPC monopoly. The 2017 oil import monopoly for NNPC isn’t the best. The need to expand private sector partnership with prudent accountability enabled by technology will open the downstream space even more.”
Leave a Reply