Formalizing Illegal Refineries: The Best News of 2017

The best initiative Nigeria government has ever conceived towards holistic solution to the Niger Delta problems as well as the Oil and Gas industry development after the Petroleum Industry Bill (PIB), was announced yesterday by the Acting President, Prof. Yemi Osinbajo. Many regimes have been reluctant to take needed bold steps in this regards, especially recognising the impact of these illegal refineries, hence retarding advancement of this local technology and skills.
The announcement, though noble, should not be mixed with political intent. It must be taken as a national development concern. One that is directly linked with social, economic and political development of the country. The importance of the oil industry in economic and social existences of the Niger Deltans and macroeconomic stability of the country posit that making this pronouncement timely and necessary.


This initiative, as noted, would greatly impact the oil and gas industry business equations and structure of Nigeria economy. It is as a result government should effectively plan and monitor the implementation of this initiative. The proposed legalization of these illegal refinery into a modular form would mean increase in local production of refined petroleum products. Also, the production capability of these local refiners would be increase to other refined products, as their technical and facilities have been restricted to refining of low quality diesel and black oil only.

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In the same vein, ensuring the process retained the local technology and technical method along provision of modern facilities would foster the sustainability and advancement of ready existing local technology. This would reduce technical reliance of the country on foreign expatriates, then positioning the country along her peers who have advanced their local technology. So I would hold-out that the idea of importing modular refineries should never be considered, rather the government should seek technical help towards modernizing the crude approach of these local refiners.

Leveraging on the skills of the operators of these refineries, the government would also develop a lot of small outlets refining crude oil for domestic use, greatly reduce the country’s reliance on imported refined products and save enormously forex monthly spent for this purpose. Nonetheless, many associated cottage industries such as petrochemical and others would greatly benefits from the improved refining activities, therefore wealth creation is made possible within the region known for oil exploration only. With an uninterrupted production from these local refineries, Nigeria would become a net exporter of refined petroleum products to her neighbouring countries, some of who depend on supply from Nigeria to meet local demand for these products.

The other positive externalities that would emanates from the government initiative would be abundance jobs from the cottages industries, therefore reducing militancy and crime within the region. This would mean increase in investment opportunities as a result of safe and stability production environment and increase revenue potentials of government at all level in the country. Interestingly, the implementation of this initiative would propel growth, more importantly inclusive-growth, as productivity of many sectors would be enhanced through the utilization of by-products from local refining activities. This will translate to economic stability and reduce exposure of Nigeria economy to global oil and commodity markets shocks.
Diversification of the economy would be achieved within a short period of time.

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As happy as most Nigerian are about this pronouncement by the government, its non-implementation would greatly affect the integrity quotient of this government, one not needed at this moment. Popular support and participations of Nigerians at this point are sine que non to ensure success of this administration.

God bless Nigeria.

Shakirudeen Taiwo
Economic and Public Policy Analyst



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