Uche Usim, Abuja
To ensure availability of petroleum products for local consumption, the Federal Government on Wednesday disclosed that it was in talks with a number of financial institutions like the Central Bank of Nigeria (CBN), International Finance Corporation (IFC), Nigerian Sovereign Investment Authority (NSIA), among others, to provide contributory financing to potential investors in modular refineries in the Niger Delta.
Speaking at the ongoing Nigeria International Petroleum Summit (NIPS) in Abuja, Mr. Rabiu Suleiman, the Senior Technical Adviser to the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, stated that apart from financial support, the government would also guarantee regular crude oil supply to investors to ensure a win-win situation for them and Nigerians.
Suleiman added that the investors will also enjoy customs duties waivers and other incentives to ensure that 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 indicated their willingness to invest in the refineries and gain equity share.
The Federal Government had in November 2017 disclosed that it was considering granting 13 operational licenses for modular refineries in the Delta region.
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.
Suleiman explained in his remarks at an executive session titled ‘Petroleum Products Supply and Demand in Africa – Translating Crude Abundance to Product Abundance’ that these were part of government’s plans to incentivise modular refining and create jobs in the Niger Delta.
“Nobody wants to invest heavy amounts 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 impact,” he stated.
“We have a lot of programmes that will support [the] 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 levels, and we have reached a very serious level and that is going to happen,” said Suleiman.
He further said:
“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.
“We have all worked with them and they all promised to make contributory finance into that. Only two weeks ago, we engaged with NDDC; the MD made a commitment that they are going to see how they can put in some money even if it means to pick up an equity either in one or two or three of the refineries.
“State governments have said they want to be part. So, we are encouraging a lot of financing. In the next two weeks, we intend to call for an investors’ engagement forum that will address some of the funding arrangements that we intend to bring on board.”
Suleiman also stated that “Crude is guaranteed more or less. The crude is for sale, we take it offshore to sell; there is no justification why crude should not be made available to the refiners in-country. Today, we have already issued a letter to one of the proponents of the modular refineries and we directed ExxonMobil to guarantee crude supply to that refinery because they are in close proximity to Mobil in Eket.”
Also speaking at the session, Mr. Babajide Soyode, the Technical Consultant to the President of Dangote Group, Mr. Alike Dangote, characterised 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 as amusing.
Soyode, who questioned the country’s continued regulation of its downstream petroleum sector, explained that under-recovery was synonymous with subsidy. He 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 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.