Downstream productivity profiling: Panacea for successful economy

By Sunny Chuba Nwachukwu

Nigeria’s oil industry has suffered a lot of setbacks. As an oil rich economy, the country is still being tagged the world’s poverty capital. Sovereign remedy, therefore, is a feasible option for the needed economic emancipation of the Nigerian state. Over the past decades crude oil business has significantly contributed far more than 70 percent of the entire foreign exchange earnings (annually) in the economy, through crude exports to the nation’s business partners in the upstream sectoral operations.

Things, of course, have not reasonably fared well as it ought to be in the oil sector. A diligent optimization of the available opportunities was not properly taken advantage of in the oil operations, along its entire value chain. Inadvertently, sluggardness stole the place of productivity in the downstream oil sector hence, cases of exports of low sulphur content crude oil (Nigeria’s sweet crude) were visited in return with these recorded ‘dirty’ refined petroleum products, full of higher percentage of sulphur, imported from European countries by our indigenous oil marketers, who did not give a hoot nor cared about the poor quality refined fuel being brought into the country! The negative impact and side effect constantly resulted in the high risk of the general environmental pollution; from combustion engines of mobile vehicles and stationary mechanical engines for factory operations and home equipment.

Part of the drastic changes that must take place towards profiling productivity in the nation’s economic arm of the oil downstream oil sector is the legalisation of illicit refineries, which the federal government has already thought about. This initiative should be packaged with detailed legal framework, through stringent scientifically-proven requirements; as may be certified by the Department of Petroleum Resources, through supervisions of government approved petroleum training institutes (from designated tertiary institutions around the Niger Delta region; the likes of the Petroleum Training Institute (PTI), Efurun, Warri or the Emerald Energy Institute, University of Port Harcourt).

This is strategic for many reasons. The productivity in the nation’s economic sustainability can only be meaningful from the angle of downstream operations and its value chain of economic activities if the three critical dimensions of sustainability economic pillars (the triple Ps, namely, Profit/Financial benefits, Place/Environmental protection, and People/Social responsibilities) are adequately covered, fully protected and substantially met in the host communities in particular and the society in general.

Profiling productivity at a time like this in our economic climate requires drastic measures and changes that could change the tide from the presently social image and economic status of ‘world’s poverty capital’, especially when the potentials for a paradigm shift and the capacity to improve on the poor performances are richly endowed with the needed natural resources and the attached comparative advantages that are at play.

Two important aspects that should be seriously addressed, with a view to boosting the financials, are measures to plug revenue leakages by drastically reducing the crude oil theft to the barest minimum, once this legalization initiative of the unconventional refining activities in the Niger Delta creeks are formally streamlined and implemented. Citing the losses of about $2.8 billion in revenue incurred in the 2017 report, this singular measure will not only protect against such losses but, will tremendously improve the productivity profile of the downstream accruals through value addition, job employments, commercial activities within the economy and its exports, among numerous others.

The other aspect of the measures to be taken in improving the economy equally has its environmental protection dimensions (as a two-pronged approach), once the import substitution differential is actualized through stoppage of the imports of high sulphur content refined fuels from Europe by oil marketers. Its negative impacts on counting the costs include both the environmental pollution and health hazard created for humans with pollutants from the release of high sulphur content into the atmosphere. In addition, costs of heavy mentenance on machinery running on the poor quality fuels are significant (as a drawback to the economy).

Dismantling of the illegal or illicit refineries operating within the Niger Delta region with military force will not solve the social and economic problems attached to such operation; rather, it will be counter productive. The best approach to it involves the application of sound academic exposures to such entrepreneurs who engage in the unconventional ways of heating and distillation process of crude oil (cracking the hydrocarbon chains into various grades of refined petroleum products); and capacity training for full professional appreciation of the characteristics of the products being refined. The full positive impact of the Research and Development of the training institutes (as earlier suggested) will heavily cut down on the cost of entry into local refining operations, if it is then scientifically approved and endorsed, as the indigenous technology for the downstream oil sector in the country. This will make the achieved indigenous technology a unique and peculiar economic success for the nation’s oil industry. Government ought to encourage the implementation of this initiative, and the application of this package.

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Nwachukwu, a graduate of pure and applied chemistry with an MBA in management, is an Onitsha based industrialist, a fellow of ICCON, and vice president, finance, Onitsha Chamber of Commerce.

Sunny Chuba Nwachukwu (FICCON, LS)

Onitsha, +2348033182105