For the government to mitigate economic failure in Nigeria, there is need for more investment in local refining as a way out of the looming recession, as well as help the country remain resilient post-COVID-19 and beyond. Specifically, the Chairman of OPAC Refineries, Momoh Oyarekhua, said by encouraging and increasing local refining, Nigeria saves itself the embarrassing situation of chasing crude buyers around the world.
This he said can also eliminate the importation of premium motor spirit (PMS) and other refined products thereby making it possible that the country cuts its foreign exchange exposure. “We can save a lot of foreign exchange, which will be utilised to fund other important sectors of the economy, which will mean that, as a country, we will not be heavily exposed to the international crude or currency politics.
“More investment is needed to increase our local refining capacity and the government should provide specific ‘Target Framework’ to further support and encourage local investors in this sector so as to ensure that we produce enough for our local consumption and even for export to earn more foreign currencies while creating jobs,” Oyarekhua said.
Recall that, following the outbreak of the COVID-19 pandemic, the world economy had gone into a downturn resulting from the shutdown of economic activities leading to reduced or near absent demand for crude oil. The resultant effect was the drastic fall in the price of crude to nearly $10 in the international market.
On the back of the crisis occasioned by the pandemic, was the collapse of dialogue between OPEC and Russia over the proposed oil production cut leading to a Russia-Saudi Arabia oil price war in March. Russia’s refusal to reduce oil production to keep prices for oil at a moderate level led to a brutal collapse of prices.
This disagreement further plunged the price of oil to a crumpling level of 65 per cent quarterly fall with US oil prices falling at about 34%, Crude Oil fell by 24 per cent and Brent at 24 per cent decline. Reacting to this development and the anticipated future crisis, Oyarekhua said government increasing and doubling support for local refineries will further reduce the hardship faced by some of the players in the downstream sector of the oil industry; whilst ensuring that Nigeria can achieve better consumer-friendly pricing for PMS and other finished products which can be produced locally.
He argued that, as a Nation, Nigeria must boost the capacity of local refineries and scale the modular refineries to meet the challenges of the future and to also sustain the gains the country has made in the oil and gas industry. Speaking on how Nigeria can survive post-COVID-19, he noted that Nigeria is a very resilient country and would most likely come out of the crisis strong, but will have challenges.
However, these challenges according to him should be used as stepping stones to make us better and greater than we are today.