Nigeria must shore up its refining capacity

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By Tolu Aderemi


Nigeria’s Chairman, International Law Association (ILA) Arbitration Committee, Mr Tolu Aderemi has charged Nigeria’s federal government to direct savings from the proposed phased-removal of petroleum subsidies to social infrastructural projects in Nigeria.

This, according to him, is the only way Nigerians can benefit from such removal.

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Speaking during a media interview on Thursday, January 5, 2023, Aderemi described the removal of petroleum subsidy as long overdue and that Nigeria and Nigerians can no longer sustain it.

According to him, if at all the next administration wishes to consider re-introducing it, it must only consider production subsidies and not consumption subsidies.

The ILA Arbitration Chief posited that consumption subsidies breed wanton corruption and must forwith be discouraged, saying that the effect of this removal will mean that the price of refined petroleum will now be determined by the forces of demand and supply.

Aderemi, who is also the Energy & Infrastructure partner with one of Nigeria’s top commercial law firms, Perchstone & Graeys LP, noted that there is nothing political in the removal of petroleum subsidy as this was already contained in the 2023-2025 Medium-Term Plan.

Asked whether this will foist hardship on the common Nigerian, he explained that sadly, it may in the short term but in the long term, things will even out.

He further stressed that Nigerians must understand that the benefit of subsidies, which ordinarily should be enjoyed by the common Nigerian is, in fact, enjoyed by the rich and urged the Federal government to correct this disequilibrium.

“The other category of those who illicitly benefitted from the subsidy regime were the importers of the product who brought in the same vessel several times and in the end, sold the same vessel to neighbouring Chad, Central Africa Republic (CAR) etc at a higher cost, having taken the benefit of subsidies in Nigeria. These are the real people who enjoy the benefit of oil subsidies,” Aderemi added.

He pointed out that the outgoing President Buhari’s administration and the leadership of the Mele Kyari of the Nigerian National Petroleum Company Limited, have significantly reduced corruption occasioned by subsidies, as was done in the past and this must be sustained.

On his views about Nigeria’s increased oil production to 1.6 million barrels per day from 937,000 barrels per day, Aderemi said “this was largely a strategic and effective effort of the current leadership of the NNPC in its fight against crude oil theft. The increase is a result of blocking oil leakages which hitherto otherwise described as bunkering (illegal
Mining).”

He however encouraged the incoming administration to maintain the rectangular approach of shoring up Nigeria’s oil production so that it can meet its OPEC quota.

In addition, he also advised that for this increase to impact ordinary Nigerians, we must discontinue the importation of premium motor spirit (PMS) and other refined products and invest more in our local refining capacity. This is the only way Nigerians can benefit from the increased revenue made from increased production of crude oil.

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