FG urged to replicate success of Eleme Petrochemicals privatisation with refineries

Analysts in the oil and gas industry have stated that if the government is serious about privatisation of Nigeria’s moribund refineries and liberalise the downstream sector, there is no shortage of examples to follow or model to build on.

One such example is the success of the privatisation of Eleme Petrochemical Limited that went from a loss yielding plant and only capable of utilising 25 percent capacity to a profit making organisation within two years, because government took a bold step to privatise the plant.

Prior to the privatisation of the petrochemical plant, it was 100 percent subsidiary of Nigerian government owned Nigerian National Petroleum Corporation (NNPC), with the name Eleme Petrochemicals Company Limited (EPCL).

When the erstwhile EPCL was privatised, under the Privatization Programme, Indonesia’s Indorama Group emerged as the core investor and acquired the unit in August 2006.

Since then, EPCL has recorded several achievements of smooth and stable operations, enhanced production capacities, winning of several global awards and certifications and has become a successful model of the Nigeria’s privatisation programme.

Alex Ogedengbe, former managing director of Kaduna Refinery, spoke on the success of the initiative, “Eleme Petrochemical was 100 percent owned by the government through NNPC. It ran for 15 years at 25 percent capacity, and when it was sold within one year it went from 25 percent to 100 percent and it was making profit of N20 billion per annum after tax.”

Analysts have at several fora called on the Federal Government to get out of the business of importing fuel and leave it to private investors, as the lingering fuel scarcity has shown that government cannot adequately manage the process.

Muda Yusuf, director-general of Lagos Chamber of Commerce and Industry, has also called for private sector driven petroleum downstream sector, speaking on the lingering fuel queues, said, “Solving a problem like this needs to be private-sector driven. The whole issue has been built around the public sector, particularly around the NNPC and it is not helping.”

According to Obadiah Malafia, former deputy governor of the Central Bank of Nigeria, “We need a free non-subsidised market for PMS. Government and private sector should be free actors in that market. Fair competition will make supply and demand to have a clearing price free of any chicanery.”

Ten years after, privatisation provides the strongest argument in favour of privatisation of both Nigeria’s refineries and deregulating and liberalising the downstream sector of the economy.

Since the acquisition by Indorama, the company has significantly contributed in import substitution by supplying quality polymer products to over 200 plastic processing companies in Nigeria and export to several countries. It has also engaged over 1200 Nigerians reducing unemployment.

Indorama Eleme Petrochemicals Complex is a sprawling 400 acres asset located in Eleme Local Government Area at the outskirts of Port Harcourt City, the Capital of Rivers State, in Southern Nigeria.

Through the privatisation, the owners attracted funds through a consortium comprising The Complex was built by a consortium comprising Chiyoda Corporation, JGC and Kobe Steel of Japan, Technimont of Italy and SpieBatignolles of France to construct the complex.

The complex has state of art Olefins plant, Polyethylene/Butene and Polypropylene Plants, The operations are well supported by a Captive Power Plant, Utilities, Effluent Treatment Plant, Storage Tanks, Bagging, Warehouses and other supporting facilities. A PET plant was also been commissioned in July 2012.