The Crown News

…bringing the world closer to you

The Great PIB Swindle: Nigeria’s Oil Money Under Siege

2 min read

In the corridors of power, the Petroleum Industry Bill (PIB) was hailed as the panacea to Nigeria’s oil sector woes – a landmark legislation promising transparency, accountability and fair distribution of the nation’s oil wealth. Yet, as the dust settles it reveals a disconcerting reality of promises not meant to be fulfilled.

Running the NNPC Ltd like a fiefdom

Let’s do a quick refresher. According to the latest data from both the U.S. Energy Information Administration, Nigeria is ranked 11th in the world and 4th in Africa in crude oil production as at September 2023, with an average of 1.14m barrels/ day. While its crude oil production quota approved by the Organisation of Petroleum Exporting Countries for December 2023 is 1.72m barrels/day, no figures could be traced or anchored to the NNPC Ltd within the same period.

The four government-owned refineries in Nigeria built between 1965 and 1989 have all been shut down for donkey years due to, chief amongst them, structural neglect. Their total refining capacity is 445,000 barrels/day. Data provided by KNOEMA – a global data platform, shows daily consumption of 520,000 barrels/day in December 2023.

Data available as at 2019 shows about 43 licences were granted for large and modular refineries, out of which only about 4 modular refineries may be operational with a total capacity of 34,000 barrels/day to grow to 135,000 barrels/day.

The Dangote refinery which cost $19bn and already commissioned in 2023, but yet to start operations, has a production capacity for 650,000 barrels/day. Through ‘Project Bison’, and not through the Sovereign Wealth Fund (SWF), the NNPC has audaciously gone ahead to acquire a 20 percent stake in the refinery for $2.76bn and to rub salt to injury will also deliver 300,000 barrels/day of crude to Dangote at a discount and to forfeit 100 percent dividend that will be declared within the repayment period.

Additionally, ‘Project Gazelle’ – a loan of $3.2bn was collected from AFREXIM bank to fund the Federal Government dollar liquidity crisis while repayment will be from crude oil.

Despite going to own 130,000 barrels/day of oil from Dangote, NNPC chose to squander $1.5bn in 2021 to renovate the antiquated Port Harcourt refinery, which lacks readily available spare parts. The renovation project is expected to take 44 months (until July 2024) and its first phase progress is unknown. The condition of the other three refineries is also unclear.

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © All rights reserved. | Newsphere by AF themes.