Modular refineries: FG in talk with CBN, BOI, IFC for funding

February 21st, 2018

By Obas Esiedesa

As Federal Government continues to push its policy of boosting local refining of petroleum products locally, especially as it affects the setting up modular refineries, the government says it is in talk with a number of financial institutions to provide funding for the projects.

The Senior Technical Adviser to the Minister of State for Petroleum Resources, Mr. Rabiu Suleiman disclosed this at an executive session titled: ‘Petroleum products supply and demand in Africa – translating crude abundance to product abundance’ at the on-going Nigeria International Petroleum Summit (NIPS) in Abuja on Wednesday.

He listed the potential financiers to include the Central Bank of Nigeria (CBN), International Finance Corporation (IFC) and Nigerian Sovereign Investment Authority (NSIA).

Suleiman who allayed fears of investors about government determination to see the policy through, stressed that the government would also guarantee regular crude oil supply to investors in modular refineries in the Niger Delta region.

This, he explained, will be in addition to tax and custom duties waivers the investors will also enjoy from the government to ensure their projects take off and remain profitable.

Apart from NSIA, CBN, and IFC, Suleiman, noted that the Niger Delta Development Commission (NDDC) and some state governments have equally indicated their willingness to invest in the refineries and gain equity share in them.

Suleiman stated that these were parts of the government’s plans to incentivise modular refining and create jobs in the Niger Delta.

According to him, “Nobody wants to invest heavy amount of money in places where you are not very sure of doing the business without being interfered in one way or the other. Modular refining is a small ticket business and it has very long impacts.

“We have a lot of programme that will support modular refining initiative, and a lot of incentives have been put together to support this initiatives, right from customs duty waivers. Anybody who wants to invest in modular refining in the Niger Delta is going to benefit from such custom duty waivers and tax reliefs that is being discussed at very senior level and we have reached a very serious level and that is going to happen,” said Suleiman.

“On financing, we have engaged from government, the Central Bank, we have engaged the Bank of Industry, we have engaged Sovereign Wealth Fund, we have engaged Infrastructure Bank. We have engaged a lot of them including the IFC and the rest”.
The federal government in November 2017 disclosed that it was considering granting 13 operational licenses for modular refineries in the Delta. It also has as part of its policy to revive the country’s oil sector – the Seven Big Wins, plans to incentivise construction of modular refineries in the region.

In his contribution, the Technical Consultant to the President of Dangote Group, Mr. Babajide Soyode, explained that claims by the Nigerian National Petroleum Corporation (NNPC) that it was experiencing an under-recovery in its importation and sale of petrol in the country was comical.

He questioned the country’s continued regulation of its downstream petroleum sector, explained that under-recovery was synonymous with subsidy. He thus suggested that the corporation has gone back to subsidising the country’s consumption of petrol.

He also questioned the 445,000 barrels per day (bpd) collective nameplate production capacities of NNPC’s four refineries in Kaduna, Warri and Port Harcourt, adding that the refineries have some irregularities in the capacities of their units.

According to him, 15,000bpd of Warri, 10,000bpd of Kaduna, and 65,000bpd of Port Harcourt we’re not available, and as such it would be wrong to continue to state that the refineries collectively have a processing capacity of 445,000bpd.

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