….Targets 100% local fabrication of modular refineries
The federal government has revealed that only two out of 50 licensees granted authorisation to operate private refineries across the country in recent time are making what it described as meaningful progress.
Minister of petroleum resources, Dr. Ibe Kachikwu, who expressed disappointment at the situation, stated that his ministry in collaboration with the Department of Petroleum Resources (DPR) consequently invited the licensees for a discussion to ascertain the challenges they were facing but failed to disclose their findings.
Kachickwu who was represented at the event by Olumide Adeleke deputy director of DPR revealed this while speaking at this year’s Association of Energy Correspondents of Nigeria (NAEC) in Lagos recently stated that the federal government was exploring every available opportunity to optimise local refining capacity.
According to him, the government in pursuing this goal first initiated steps towards revamping the nation’s refineries in Port Harcourt, Warri and Kaduna. He explained that the government was not considering concessioning of the refineries nor selling them in whole or part, as doing so would not allow for achievement of optimal value because of the current state of the refineries.
On efforts to source for funds to salvage the situation, Kachikwu said, “We sought externally for resources to finance the rehabilitation of the existing refineries, which was a very tall order, telling someone to invest about $1billion in the refineries rehabilitation with no equity, and wait for incremental volumes of refined products to recoup their investment.”
Speaking on the failure of licensees to deliver, the minister said, “The second dimension was to ascertain what holders of existing licenses to establish refineries have done since they were issued their licenses. Of about 40-50 licenses issued by DPR for the establishment of modular refineries, only two (2) have shown substantial progress.”
According to him, the high percentage of non-performance led to engagements with licensees to ascertain the issues with a view to removing all bottlenecks. But he failed to reveal the details of government’s findings.
The source who pleaded anonymity further stated that the meeting was necessitated by the failure of many licensees to progress to next stage of implementation after the first stage of merely request for approval.
He added that under normal circumstances the validity of the licence to establish a refinery or plant shall be for a period of two years after which it shall elapse.
“I can confirm to you that the DPR in collaboration with the Ministry of Petroleum Resources held series of meeting with the CEO of the companies granted licenses to establish refineries. Our finding showed that the greatest challenge the prospective operators face is access to fund,” the source said.
Our source explained further that since most of the equipment were sold in dollars, the task has become tougher with the current situation in accessing foreign currency (FOREX) in the open market.
According the DPR, there are three levels of approval for setting up private Greenfield (new) or modular refineries in the country. These are Approval to Establish (LTE), Approval to Consult (ATC) and Licence to Operate (LTO).
In what appears as a confirmation of the minister’s statement , a document titled: ‘List of Private Refineries Licence,’ obtained from the DPR website showing the current state of these refineries revealed that only two licencees namely Resources Petroleum & Petrochemicals International Incorporated located at Ibeno, Akwa Ibom State and Dangote Oil Refineries, Lekki Free Trade Zone, Lagos have reached advanced stages.