Nigerian Refineries may end-up like Nitel – Seplat CEO

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LAGOS FEBRUARY 22, 2017 – The Chief Executive Officer of Seplat Petroleum Plc, Mr. Austin Avuru, has called on Nigerians to embrace the sales of non performing national assets that are gulping resources which are needed for more useful investments in the country.

Avuru pointed out the delay in the sale of Nigeria refineries supposed to have been carried out during the Former President Olusegun Obasanjo administration saying such delay may make the situation end up like Nigerian Telecommunications Limited, NITEL.

Speaking at the KPMG Tax Breakfast Meeting with the theme, “2017 Budget- Implications for Business and Tax,” Avuru said that there was no reason keeping the refineries when 90 percent of products needed are still imported.

“Looking at the refineries, when was the last time it operated at its highest capacity? When was the last time we were not importing 90 percent of product needs? The question remains what are they doing for us that we keep allocating capital annually to take care of about its 2000 staff.”

“If you sold a refinery back in 1999 to 2007, when Obasanjo tried to sell it, we would have made about $2 billion but if we want to sell it today, we will be lucky to make $1.5 billion and if you put them for sale after Dangote refinery is commissioned in 2019, you won’t make up to $300 million.”

“We have 19 depots around the country, assuming they are functional with inter-connecting pipeline, no truck is supposed to drive more than 3hours to pick up the product but none of them is functioning. If we sell the refineries, they will become more efficient and also generate revenue for government.”

Budget for three power projects

Avuru who joined the KPMG Team in the launch of ‘Global Principles for a responsible Tax Practice’ and ‘Nigerian Tax Journal’, disagreed with government approach towards power sector, saying that N56 billion in 2017 budget for three power projects was unnecessary.

“Why are we putting more money to build power plant when there are about 2000 megawatts of electricity trapped in power plants that are already built by government due to lack of gas.

“The country’s existing capacity to generate electricity is over 6,000 megawatts but we are still with 3,000 megawatts which makes the problem more complicated because at 3,000 megawatts and at the current tariff in which every month deficit keep accumulating, today we need a capital injection of about $1.2 billion just to cure the crises and move on.” On his part, Partner and Head, Tax, Regulator and People Services at KPMG in Nigeria, Mr. Wole Obayomi, called on government to embrace the idea of using annual budgets to launch fiscal reforms.

“Development of tax law, administration and practice is a joint and several responsibilities of the government, tax administrators, practitioners and academics alike.”

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