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Hope for reduction in petrol import bill falters

Plans to reduce Nigeria’s fuel import bill through domestic refining may have be faltering as the Department of Petroleum Resources, DPR, weekend, put the number of inactive refinery projects at 39, as of August 19, 2021.

Estimated cost of importation of petrol in 2021 is about N2.75 trillion as the first quarter import bill for the product recorded N688 billion.

The DPR had granted License to Establish (LTE), Approval to Construct/Relocation (ATC/R), and License to Operate (LTO), to a total of 71 companies, in order to reduce the nation’s over-dependence on imported petroleum products.

But in its latest report titled ‘‘Status of Refinery Licenses’’, obtained by Vanguard Public Finance, the agency noted that works were ongoing on 32, while 39 were inactive, meaning that their construction and operation would either be delayed or completely scuttled.

Breakdown

A breakdown of the project report showed that 23 were inactive in the LTE category.

They include Platinum Hydrocarbon Resources Limited, Mondonat Nigeria Limited, Southfield Petrochemical & Refinery, Don Mac Limited, Shepha Petroleum & Petrochemicals Company Limited, Associated Worldwide Company Limited, All Grace Energy Limited, Kainji Resources Limited, Aiteo Energy Resources Limited, Epic Refinery & Petrochemical Industries Limited, Masters Energy Oil & Gas Limited, Cross Country Oil & Gas Limited, Grifon Energy Limited, Sifax Oil & Gas Company Limited, Capital Oil & Gas Industries Limited, Green Energy International Limited and Fresh Energy Limited.

It also indicated that 16 projects under the ATC/R category were Conodit Refinery Nigeria Limited, Niger Delta Petroleum Resources and Petrochemical Limited, RG Shinjin Petrochemicals Limited, Jil-Amber Consortium, Dee Jones, Hi-Rev Oil Limited, Starex Petroleum Refinery Limited, Eko Petrochem & Refining Company Limited, Petrolex Oil & Gas Limited, Ikwe-Onna Refinery Limited, Rivgas Petroleum & Energy Limited, Clean Waters Refinery, SouthWest Refineries and Petrochemicals Co. Limited, Obat Refinery Limited, Antonio Oil Company Limited and Sapele Petroleum Limited.

Of the 32 active projects, according to the DPR report, 13, including Ogini Refinery Limited, NPDC/ND WESTERN OML 34 JV, Kingdom Global Trading Petroleum & Gas Nig. Limited, Bua Refinery & Petrochemicals Limited, Eghudu Refinery Limited, American Exploration Company Nigeria Limited, Gbaramatu Oil and Gas Producing Trust Fund, NME Consolidated Limited, AIPCC Energy Limited and Energia Limited were under the LTE category, while 17, including Etopo Energy Plc., Resource Petroleum & Petrochemicals International Incorporated, Lowrie Refinery Limited and Gasoline Associates International Limited were under the ATC/R category.

However, under the LTO, DPR listed the Niger Delta Petroleum Resources (Phase I and II) and Waltersmith Refining & Petrochemical Company Limited, as companies granted licenses to start operations.

The report, which did not provide the expected completion targets, added that the 39 inactive projects were expected to refine 1,821,000 barrels per day, BPD, while the 32 active projects would process 1,560,000 BPD.

This means that the domestic utilization of crude, expected to rise by 650,000 barrels per day, on completion of the Dangote Refinery next year, would further increase significantly on their completion.

Problems

The report did not specify the reasons for the inactivity in some of the projects, but industry leaders attributed it to some problems in the sector, especially lack of funds, inconsistent policies and delay in the passage of the nation’s Petroleum Industry Bill into law.

Prospect.

In any case, the National President, Oil and Gas Service Providers Association of Nigeria, OGSPAN, Colman Obasi, said many investments stand to be boosted with the latest passage of the nation’s Petroleum Industry Bill into law.

Specifically, he said: “The industry suffered serious investment challenges, due mainly to lack of legislation and other factors. But with the emergence of the Petroleum Industry Act, PIA, we are optimistic that local and foreign investors, as well as financiers, would be encouraged to fund projects, including the refineries.

“Indeed, we are hopeful that many of these projects would be completed in the future, thus turning Nigeria into a major refining hub in West Africa. In other words, Nigeria would be able to meet the domestic demand for petroleum products as well as export to other nations.”

A Port Harcourt-based Energy Analyst, Dr. Bala Zaka, also said: “With the prolonged delay in the passage of PIB, Nigeria lost its steam, especially in terms of investments. But with the current PIA, we are looking forward to a positive change. Indeed, as a leading petroleum nation with about 37 billion barrels reserves, Nigeria deserves to establish many domestic refineries.”

Speaking at the post-PIA event in Abuja, the Senate President, Ahmad Lawan, had said: “Of course there will be so much employment and jobs, especially in the midstream of the value chain. This midstream has not been in existence, so to speak. What we have is the upstream, and then the downstream. When our refineries will be better – and more will be established – I’m sure the value chain will have opportunities for more Nigerians to have jobs, and so on.”

State participation

However, the Federal Government has already indicated interest to acquire stakes in some of the investments, with over 50,000 BPD.

In a recent statement obtained by Public Finance, the Nigerian National Petroleum Corporation, NNPC, had stated: “These roles will enable it to achieve the twin objectives of providing energy security for the country and stimulating the nation’s economic development and growth.

“The oil refining sector is one of such segments where NNPC is revisiting its strategy in order to strengthen domestic refining capacity and guarantee national energy security. The new vision is to grow domestic refining capacity, improve petroleum products supply from our local refineries and become a net exporter of petroleum products.”

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