Nigeria is experiencing a renewed wave of independence from colonial influences, this time achieving it through energy independence via the domestic refining of its rich crude oil resources. This transformation is being spearheaded by indigenous investors, who own refineries, representing a significant step away from neo-colonialism and imperialism.
The reason local refining of petrol by indigenous investors is being used as the linchpin of Nigeria’s economic independence after political independence was secured in 1960 is due to the central and all-encompassing role that petrol plays in the life of Nigerians. That is evidenced by the negative effect of the withdrawal of subsidy on petrol pump price some seventeen months ago at the inception of the incumbent administration and how a critical mass of Nigerians was thrown into severe economic hardship and misery. All because petrol drives transportation which is pivotal to the socio-economic activities of all Nigerians.
Key players in securing this second independence, the petroleum energy sufficiency include the Dangote Refinery in Lekki, Lagos, which has a capacity of 650,000 liters per day, as well as five modular refineries, Aradel in Port Harcourt, Rivers State, producing 11,000 barrels per day (bpd); Waltersmith in Imo State, with a capacity of 5,000bpd; Edo Refinery and Duport in Edo State, producing approximately 6,000 bpd and 2,500bpd, respectively; and OPAC in Warri, Delta State, which has a capacity of 10,000bpd.
Importantly, all five operational refineries plan to significantly expand their capacities, signaling that Nigeria is on the verge of moving from a state of scarcity to one of surplus in petroleum products, all things being equal.
It is crucial to recognise that past government policies, such as putting some economic activities in the Exclusive and Concurrent Lists of government which precludes the private sector from engaging in certain economic activities, some of which the Petroleum Industry Act (PIA) enacted in 2021 has begun to reform are culprits. That is derived from the fact that they are some of the factors that have hindered the modular refineries from producing petrol despite some being operational for over two decades. For example, Aradel has been in operation since 2010 but has not produced petrol due to regulated pump prices and the Nigerian National Petroleum Company (NNPC) preference for subsidising petrol imports rather than local refineries.
Consequently, local refineries have focused on producing other petroleum products such as Automotive Gas Oil (AGO), naphtha, and black oil for over thirty years. It is absurd that local producers were denied subsidies on petrol pump prices despite their capacity to generate numerous direct and indirect jobs. As such, the lack of encouragement for petrol production is preposterous. It demonstrates the high level of lack of patriotism by those assigned the responsibility to serve our country at high level.
Subsidizing the refining of petrol at modular refineries would have enhanced our country’s Gross Domestic Product (GDP), instead of exporting capital and jobs to foreign countries that supply petroleum products to Nigeria. This export of highly needed hard currencies has exacerbated pressure on the naira and contributed to exchange rate instability.
Tinubu and Dangote
Unlike the regulated prices of petrol, the prices of other petroleum products have historically been determined by market dynamics. With the reforms introduced by the Petroleum Industry Act (PIA) and the elimination of petrol subsidies, Nigeria appears poised to attain more autonomy via genuine energy independence. This process began with Dangote Refinery starting local petrol production at the beginning of September of this year.
The encouraging news is that Nigeria is set to take a significant step towards economic independence and energy security on the 1st day of October, when Dangote Refinery will begin receiving crude oil supplies paid for in naira, enabling the refinery to sell to local distributors in the same currency.
Coincidentally, October 1st marks the anniversary of Nigeria’s political independence from colonial rule 64 years ago.
Although four state-owned refineries were established between 1965 and the 1980s, they have not produced refined petroleum products for about 28 years. These refineries fell into disrepair due to mismanagement by bureaucrats who prioritized personal gain over public service, embezzling funds intended for essential maintenance that never took place. Their negligence has certainly resulted in a breach of the public trust placed in them as public servants.
To provide some historical context, Nigeria discovered crude oil in Oloibiri, located in present-day Bayelsa in the oil-rich Niger Delta, in 1958. Seven years later, the country built its first crude oil refinery in Port Harcourt, with a capacity of 60,000 liters per day. This was followed by a second refinery in Port Harcourt, a third in Warri, and a fourth in Kaduna, bringing the total number of state-owned refineries to four, with a combined capacity of 445,000 liters per day.
As we know, after a period of operation during which Nigeria enjoyed a degree of energy independence, the four refineries became non-functional about 28 years ago. This decline occurred despite numerous turn-around maintenance contracts awarded by successive governments, amounting to trillions of naira, aimed at restoring their functionality.
It is evident that the substantial investments made to revitalize these refineries have not yielded any positive outcomes, with numerous start dates announced over the years that never materialized. The facilities remain in a state of disrepair, raising questions about how they could still be inactive despite the significant funds spent on their rehabilitation. This situation suggests either a high-level conspiracy to undermine Nigeria by those tasked with refurbishing the refineries—who may be aligned with the interests of those profiting from continued imports of petrol into Nigeria —or that the facilities are in such poor condition that efforts to revive them by NNPCL are futile.
Continuing with the historical context, it’s important to note that Nigeria gained political independence from Britain on October 1, 1960. However, the country remained economically dependent on European nations due to the presence of various foreign companies operating in Nigeria, which were linked to their parent companies abroad where policy decisions were made. This was especially true for British firms, given that Britain was Nigeria’s colonial ruler, with these subsidiaries essentially acting as extensions of their parent companies in London.
In addition, firms from France, Germany, and Portugal swiftly established their presence in Nigeria, with their subsidiaries managed from Paris, Berlin, and Lisbon, where strategic decisions were formulated and relayed for execution. Given that Britain initially engaged with Nigeria as a trading partner before merging the northern and southern protectorates into a single colony known as Nigeria in 1914, it’s understandable that the grip on trade persisted even after Nigeria’s political independence in 1960. While Nigeria achieved political sovereignty, it did not attain economic freedom.
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Consequently, the Nigerian oil industry and the broader economy, with only a handful of indigenous investors, have been stifled by what can be described as the “rentier economy syndrome.”
It is such a source of curiosity to me that some Nigerians continue to push a political agenda by falsely claiming that foreign firms are exiting Nigeria in droves while it is the reality that British companies continue to dominate Nigeria’s economy. Not just in manufacturing but also in professional services, including:
1. PwC Nigeria (audit, tax, consulting)
2. KPMG Nigeria (audit, tax, advisory)
3. Ernst & Young Nigeria (audit, tax, consulting)
4. Deloitte Nigeria (audit, tax, consulting)
5. Linklaters Nigeria (law firm)
In the financial services sector, major players include:
A. Standard Chartered Bank Nigeria
B. Barclays Bank Nigeria (now Absa Nigeria)
C. HSBC Nigeria
D. Ecobank Nigeria (partially owned by the UK’s Ecobank Transnational)
E. ARM Investment Managers (part of the UK’s ARM Holdings)
The technology services sector also features companies such as IBM Nigeria, HP Nigeria, Oracle Nigeria, Microsoft Nigeria, and UK-based tech firms like Andela, Interswitch, and Flutterwave, all of which maintain operations in Nigeria.
The logistics and supply chain sector also features a considerable number of companies originating from the UK, including DHL Nigeria, UPS Nigeria, FedEx Nigeria, and Maersk Nigeria, which is part of the UK-based A.P. Moller-Maersk. Bollore Logistics Nigeria is another firm that has maintained its operations in the country.
Similarly, the education and training sector includes the British Council Nigeria, IDP Education Nigeria (which provides study abroad services), Study Group Nigeria (education consulting), Pearson Nigeria (education services), and Cambridge Assessment Nigeria, all of which are actively involved in the market. Additionally, CharterHouse, a British boarding school, is establishing a campus in Lekki, Lagos.
The healthcare sector presents a different scenario. While some British firms like GlaxoSmithKline Nigeria, AstraZeneca Nigeria, and Sanofi Nigeria may have ceased their manufacturing operations due to challenges in importing raw materials, they remain active in the Nigerian market. UK-based healthcare providers such as Medical Tours International and Health Tours Nigeria continue their presence as well.
