This short article aims at addressing the economic woes that have bedeviled our great country since the global price of oil began to plummet. Just when the Nigerian naira have buckled under the face of this economic quagmire and the populace have entirely lost hope in the federal government’s prospects of reviving the economy, there comes the petrochemical industry to bail the country out of this situation.
This short article aims at addressing the economic woes that have bedeviled our great country since the global price of oil began to plummet. Just when the Nigerian naira have buckled under the face of this economic quagmire and the populace have entirely lost hope in the federal government’s prospects of reviving the economy, there comes the petrochemical industry to bail the country out of this situation.
It will interest you to know how many products of our everyday life are made from oil and gas industry and very few people from the general public are actually aware of it. It is in fact a fairly recent industry that has made it possible to produce all these goods: this is the petrochemical industry.
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The petrochemical industry is actually a major sector of the large-scale petroleum industry which occupies a key place in the world economy as it produces the crucial raw materials from petroleum, including kerosene, liquefied natural gas (LPG), diesel, ethane, plastic, rubber, yarn and other intermediary goods consumed across the world. Oil refineries and natural gas processing units produce streams that can be upgraded into the petrochemical plants to make higher-end products. These products are first chemical intermediates, also called base chemicals. They are at the origin of a very important international trading activity.
It is chagrin to the nation and much to our detriment that the country’s refineries and petrochemical plants have been neglected for a long time and their productivities and conditions have been below par. Now the Nigeria currency is unavoidably losing value in the international market and to exacerbate the situation, foreign and even indigenous investors are finding their way out of the Nigerian business climate. This spells sheer doom for the country if nothing is done to reverse the trend and stall the abysmal deterioration of the refineries and petrochemical industries. Let’s reason constructively on this issue of national importance, the daily crude consumption is over 445,000 barrels per day besides there are over 1,800 plastic manufacturing factories in Nigeria which would require polymer pellets derived from processing base oils as their basic raw materials. The country looks to foreign nations to satisfy this demand via importation of petroleum products thereby making the country to lose over $29.7 billion annually in revenue.
It is good enough to know that Nigeria is blessed with oil as one of its abundant and attractive natural resources but the idea of selling off these unrefined resources to other nations because of non-availability of large-scale state-of-the-art petrochemical refineries takes the similitude of selling off a cow and going back to the buyer to buy cow milk and meat.
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The challenge here I believe has not been the lack of investment but negligence on the side of the federal government to review extant policies and initiate new investment-friendly policies that will favour the investors to troop into this sector. Firms like Indorama Eleme Petrochemical Limited (IEPL) located in Port Harcourt, Rivers State have remained lone range in Nigeria’s petrochemical industry. As at 2013, the firm had an annual installed capacity of 300,000 metric tonnes of olefins, 250,000 metric tonnes of polyethylene and 80,000 metric tonnes of polypropylene, which are high value raw materials that could earn the country so much in reserve if exported. Even the Kaduna and Warri refineries that ought to provide the much-needed leap for the country’s petrochemicals industry appear to have failed to produce products that will meet the yearning of their stakeholders.
Take for instance, at inception; the two refineries were designed to produce Carbon Black and Linear Alkyl Benzene (LAB) used in the manufacture of detergents. But this capacity has also been affected by the low crude oil refining capacity in both firms. Petrochemical products, like olefins (ethylene, propylene, butadiene) and aromatics (benzene, toluene, xylene) are used in end-user markets such as paints, plastics, explosives and fertilizers sub-sectors. It is estimated that Nigeria utilizes less than 40 per cent of the refinery products, which results in lower petrochemicals yields, thereby creating a need to augment with imported raw materials.
It has been learnt that Nigeria’s inability to develop its petrochemical domain is principally the reason manufacturing companies are depending on imports for over 80 per cent of their raw materials worth over $10 billion (about N2 trillion at the rate of N200 to a dollar) yearly. It is also the reason quite a good number of manufacturers are going out of business since the Central Bank of Nigeria’s (CBN) forex restriction on more than 41 firms is faltering efforts to get its raw material.
In Nigeria and across the world, foam, plastic, paint and textile manufacturing companies depend on derivatives of petrochemicals most of which are imported because the indigenous industry has not received due attention.
Prof. Abiola Kehinde of the University of Lagos, in a research document entitled, “Strategy for the Development of the Petrochemicals Industry in Nigeria,” disclosed that the Nigerian petrochemicals market (excluding export of crude oil) is worth $14.03 billion in 2008 with forecasts projecting it could hit $29.7 billion by the end of 2015.
Nigerian refineries need restructuring of the operation to allow for greater private sector participation, which is undoubtedly going to increase the capacity utilization of these refineries. This will pave way for the establishment of more subsidiary industries that will absorb the petrochemical intermediates for due conversion to finished products. Consequently, more jobs will be created to engage the teaming unemployed youths. By projection, I see Nigeria rising out of this economic predicament to become a technological hub in Africa where most if not all manufacturing industries will be launched into their apex by the sole and colossal productivity of the indigenous petrochemical industries, that is if we get things right.
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