FG should embrace downstream oil investors – Punch Newspapers


SIX years after the regime of the President, Major General Muhammadu Buhari (retd.), expressed a fresh determination for domestic refining of crude oil, the dream remains distant. Currently, several modular refineries in various stages of completion in several states are unable to commence operations due to several impediments. This is evident from the recent representations the refiners made to the relevant government agencies. It is high time the Federal Government made good its promise to drive domestic refining by investigating and removing the obstacles hindering the refining companies.

Undoubtedly, the major outcome of the aborted in-country refining dream is the unwholesome dependence of Nigeria on imported refined petroleum products to meet domestic demand. This has devastating economic consequences. Nigeria expends a high percentage of forex importing these products, which Godwin Emefiele, the Central Bank of Nigeria Governor, confirmed takes 40 per cent of all disbursed forex. Emefiele said Nigeria drew down $1.32 billion in 2020 to buy petroleum products and petrochemicals, as against $1.04 billion in 2021.

Additionally, the Federal Government allocated N4 trillion for petrol subsidies in the 2022 budget of N17.12 trillion. It has increased the figure by 70 per cent to N6.72 trillion in the proposed 2023 N19.76 trillion budget. Currently, diesel, aviation fuel, kerosene and lubricants are out of reach of the majority of Nigerians, impacting greatly on inflation and the cost of living, and deepening poverty.

Regrettably, these hindrances are mostly self-afflicted. To arrest them, the Crude Oil Refiners Association of Nigeria has tabled some demands to the Nigerian National Petroleum Corporation Limited, its agencies and the CBN. The most obvious is CORAN members’ lack of access to feedstock (crude oil). This is surprising because Nigeria is currently the 15th largest producer of crude oil in the world. The NNPC must prioritise this, working with CORAN to give its members crude oil. This could crash the dependence on petroleum products imports by about 200,000 barrels per day initially.

Other issues facing CORAN members include the prohibitive US dollar exchange rate to buy equipment and feedstock, cost of annual licence renewal fees, and equipment for the refineries stuck at the ports. All this can be overcome if the NNPC makes it a priority. Indeed, it is a core part of the Buhari regime’s ‘Short- and Medium-term Priorities to Grow Nigeria’s Oil and Gas Industry (2015-2019)’ to process about 200,000bpd into the domestic system. Buhari and the Minister of State for Petroleum Resources, Timipre Sylva, should do the needful, given that some of the indigenous investors now have fully built processing plants, but are unsure of guaranteed availability of feedstock from the NNPC.

Modular refiners operate from 1,000bpd. They include the Waltersmith Refinery in Imo State, OPAC and Lowrie Refinery Limited (both in Delta), Edo Refinery and Petrochemical Company, Niger Delta Petroleum Resource (Train 3), Rivers State, Resource Petroleum and Petrochemicals International, Akwa Ibom State, and Atlantic International Refineries and Petrochemical, Bayelsa State.

In March 2021, the oil sector regulator confirmed that the Federal Government granted 23 licences to refiners that combined were billed to process an estimated 1.09 million bpd. Unfortunately, only one is producing just diesel out of the refiners. This is a cause for concern. Buhari and Sylva should intervene by rooting out the impediments if they are serious about ending the dependence on imported products.

Related News
  • Terror alert: We’ve reinforced security measures, says Buhari
  • Buhari to attend mining week in Abuja
  • Buhari returns to Abuja after World Bio Summit

CORAN argues that NNPC should treat its members like it is doing with the Dangote Refinery Limited. They have a point. After taking a 20 per cent stake in the Dangote refinery, the NNPC has also guaranteed it 300,000 bpd for the next 15 years. To guarantee national self-sufficiency in refined products, ensure a competitive market and stimulate exports, similar incentives should be extended to other refiners. What is sauce for the goose should be sauce for the gander. Incentives should be extended to the modular refiners without delay. The country should not replace the ruinous state monopoly on refining with a private one. It is counter-productive.

The CBN should consider creating a crude refinery intervention fund in the mould of the Bank’s Agricultural Credit Fund and Pharmaceutical Fund. This will improve Nigeria’s declining FDI inflow. Boosting domestic refinery by 200,000bpd will also relieve the chronic pressure on the naira, which exchanged for N737 to $1 this week.

The crude oil refiners may not have sufficiently highlighted how the perennial problems of oil theft and artisanal refining could hamper, or even endanger, their businesses, but that is part of what the government should be considering in improving the enabling environment.

True, they do not have to build and operate extensive networks of pipelines like the bigger refineries, but their sources of crude could be vulnerable to invasive action. The menace posed by the criminals engaged in illegal refining and oil theft should be curbed by intensifying security operations in the oil-producing corridors. The battle has become protracted because of collusion by security agents, including senior military personnel, serving and retired, with the criminals. It is, nonetheless, still winnable with a strong will, effective intelligence, arrest and prosecution of criminals, and greater deployment of technology.

Multiplicity of sources of petroleum products, with refineries and tank farms or depots in different parts of the South, would equally decongest the Tin-Can/Apapa Ports corridor in Lagos, Nigeria’s economic capital, and save man-hours regularly lost in the chaotic traffic there.

The government should treat the needs of the operators of modular refineries with utmost urgency and ensure that the NNPC does not hinder these strategic onshore investments. They have a critical position in the petroleum value chain, including the potential for job creation.

The companies should enjoy import waivers for operational equipment and materials, and their clearance at the ports should be made easy. Private refineries of all sizes should be viewed as the face and future of Nigeria’s petroleum downstream; private sector-driven and efficient, a critical phase in the evolution of that industry accompanied by the sale of the four loss-making state-owned refineries through a transparent process to competent investors.


My missing grandson’s school uniform found at shrine –Anambra trader


Naira redesign: Experts differ as minister faults Emefiele


As president, Atiku won’t disobey court order – Ologbondiyan


Yahoo boy killed schoolteacher for complaining about bashed car – VP


A’Court stops execution of judgment freeing Kanu


How Nigerian prophets gave 15 fake prophecies – Report


Netflix wants me to produce ‘Anikulapo’ series – Afolayan


Why Atiku is visiting US – Aide


Wike on personal vendetta – Rivers PDP campaign group


More like this