PM News Analysis: Jonathan drops refinery sale over 2015 politics, Oil Union Planned Strikes

Jan. 4, 2013

NewsRescue– The Jonathan administration is treading softly and postponing all wicked acts likely to after elections, not to totally capsize its boat well ahead of the 2015 elections. The last similar strike in January of 2012 almost sacked the Jonathan administration.

Nigerian Oil Unions defer strike over refineries sale. – BLOOMBERG; The Nigerian Government reverses plan to sell refineries ahead of talks and strike

The manager-level Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, with 15,000 members has scheduled talks with petroleum and labor ministry officials for Jan. 7, said its President Babatunde Ogun. The blue-collar NationalUnion of Petroleum and Natural Gas Workers, or Nupeng, hasn’t set a date for discussions, though it will “engage” with government before deciding on strike action, Elijah Okougbo, secretary general for the union representing over 30,000 workers, said today by phone.

The administrations reversal is clearly related to this planned strike action and critical media reports against any attempt to sell these assets. See: NewsRescueDiezani Prepared To Sell Nigeria’s Refineries, Again


The Jonathan government opened itself to a serious charge of duplicity and inconstancy over the future of Nigeria’s epileptic four oil refineries during the week.

On 21 December, the Bureau of Public Enterprise announced the planned sale of the state-owned refineries, the second such attempt in the last seven years.

“President Goodluck Jonathan has approved the commencement of the privatization of the nation’s four refineries by the BPE. This is in keeping with the [government] agenda, which seeks to catalyze and provide an enabling environment for the private sector to be the drivers of economic growth in the country,” the BPE said in a statement”.

The announcement itself only climaxed several public statements, including international interviews by oil minister, Deziani Alison Madueke about government’s plan to sell the refineries.

Port harcourt refinery: over 33 years old

Port harcourt refinery: over 33 years old

Diezani Alison Madueke: to head the steering committee

Diezani Alison Madueke: to head the steering committee

“We would like to see major infrastructural entities such as refineries moving out of government hands into the private sector,” Alison-Madueke said in an interview with Bloomberg TV Africa in London.

“Government do not want to be in the business of running major infrastructure entities and we haven’t done a very good job at it over all these years.” Deziani spoke in November.

It is certainly curious that a government whose officials had advertised government’s policy thrust suddenly reversed itself two weeks after the BPE announcement, with threats by NUPENG and PENGASSAN, the major oil workers unions to go on strike, looming.

“The Federal Government will not sell the refineries. There is no presidential endorsement. Even the minister does not have the powers to sell government’s property,” Reuben Abati, the president’s special adviser on media and publicity was quoted as saying on state radio.

True, the minister has no power to sell the refineries, not even the BPE, but analysts wonder why it took the government two weeks to disown a statement by BPE that it had government green light to sell the refineries?

Did government cowardly chicken out of the sale because of the likely disruption of oil flow 12 months to another election.

Did it do so because of a patriotic fervour, to keep national assets, even when clearly the assets are embarrassing liabilities in the hands of government?

My good guess is that government acted because of the former reason: the self-interest, politically, of President Goodluck Jonathan.

Emerging from a bruising five-month strike by Academic Staff Union of Universities and another three months by Academic Staff Union of Polytechnics, threatened by the union of medical doctors, the Jonathan government certainly does not want another major strike by oil unions that will not only disrupt the flow of fuel domestically, but also oil exports.

Since it is the eve of another election year, President Jonathan certainly does not want to provide materials to be exploited by political opponents, who will be quick to lampoon him for incompetence in allowing another strike to paralyse the economy of the nation.

Diezani Alison Madueke presenting a report to Jonathan: politics derails  deal on refinery

Diezani Alison Madueke presenting a report to Jonathan: politics derails deal on refinery

The country’s four refineries — which are located in Port Harcourt, Kaduna and Warri — with a total nameplate capacity of 445,000 b/d have been plagued by ageing infrastructure and poor maintenance.

Despite being Africa’s biggest crude exporter, the country is forced to import around 85% of its domestic fuel consumption and spends huge amounts of money yearly in subsidies to keep pump prices low.

The refineries were sold by the Obasanjo administration in 2007, but the sale was reversed by the Yar’Adua-Jonathan administration, after an orchestrated public outcry that the refineries were sold cheap and sold to Obasanjo’s cronies.

Now political consideration and the self interest of President Jonathan, are constituting yet another stumbling block to the offloading of embarrassing, useless national assets, the youngest of which was commissioned in 1980.

It is clearly obvious that President Jonathan has failed to demonstrate leadership on the sale of refineries. Even though there are on-going efforts to repair the refineries, there is no guarantee that the efforts, like the experience of the past, will ever stop the embarrassing situation of a major oil producer–the only one in the world– that has failed since the 1980s to refine enough fuel for its domestic consumption; and has been importing more than 80 per cent of its needs.

What can even be more humiliating for the nation: some of the fuel Nigeria consumes comes from an exchange of 60,000 barrels a day of crude for products with Trafigura Beheer BV and a similar amount with Societe Ivoirienne de Raffinage’s refinery in Ivory Coast, a non oil producer.

For now, the sale of the refineries is just on hold till 2015. They will surely be sold after the elections, either by Jonathan or his successor.