$500m funding now available for modular refineries

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* As FG says illegal refiners, militants are free to come together and apply for license

Despite seemingly dwindling fortunes in oil and gas globally, experts say Nigeria’s best bet is still to harness and exploit the hydrocarbon resources maximally especially through processing of crude and gas into different products that can be used locally. The modular refinery comes to mind, especially as it could mobilize idle youths and illegal refiners into viable modular refinery operators.

Already, funding package to the tune of $500m has been secured from Exim Bank of China to support local refiners with between $2m and $10m to be repaid at five per cent interest over 10 years.

A seasoned engineer and refiner, Rabiu Suleman, the Senior Technical Adviser to the Minister of State for Petroleum, Ibe Kachikwu, disclosed  in Port Harcourt, Rivers State, at a one-day workshop for Civil Society Orgainsations (CSOs) and the media already, 44 licenses have been granted for establishment of modular refineries while he said 10 have received approval to produce. He said four of them have started construction while two may be commissioned in March 2019.

Suleman, who posts about 31 years experience in the Nigerian National Petroleum Corporation (NNPC), one of the engineers that gave the briefing to the presidency that led to the modular refinery idea, regretted that while Nigeria’s population has grown from 110m in 1989 when he conducted then president, Ibrahim Badamasi Babangida (IBB) round the PH Refinery in 1989 to 200m in 2018, refining has rather declined.

He said modular refinery system has become necessary because normal refineries of over 60,000 bpd capacity have become very expensive needing up to $2Bn in the face of competing demands on government. He also said the need for the private sector to lead in the modular approach is because government cannot run businesses. He said the CEOs of government enterprises have to run to Abuja frequently for minor approvals. “ MDs have to run to Abuja and Lagos to get approval for everything. Besides, “If the MD sacks a worker, his senator or so will press for his reinstatement. Now, is a CEO loses the power to sanction and to reward, he has lost it. So, Nigeria has stagnated on this score.”

He said illegal refining has done huge harm to the economy. “They just boil, take small diesel, pour away the rest into the waters, pollution. The diesel is full of sulphur, it destroys generators, tankers, cars, which break down and block the roads.”

Also, modular refineries produce more of diesel than fuel. Now, the FG said it is encouraging boat engine manufacturers to bend toward diesel engines in the future.

Risk factors in investing in Niger Delta

The FG is worried that huge opportunities abound for the oil region but that violence was scaring away foreign investors. Suleman said; “The only factor is Risk Exposure in modular refineries. Violence and community restiveness is the issue. Many investors are knocking at the door but fear of instability. There is a lot of money in China and US waiting to come in but business environment is the issue. We need smart and intelligent lawyers to negotiate for Nigerians while getting the money. Taking loans that are not well negotiated caused grief for some European countries.”

He queried: “Risks: How many people have been kidnapped in the past five years? How many dead bodies have been seen on the streets? Etc. The Risk Assessment Directors in big banks ask thee questions before allowing money to come to you. That is what you must know. The risk level affects loans and interest rates.”

He said communities are being grouped into cooperative bodies to get filling station licenses to distribute the products from upcoming modular refineries. “It is to make them stakeholders so they can have interest in the modular refineries. This will reduce cost of security”.

Reacting to insinuations that the real militants were shut out in the licensing rounds, the SSA said: “The first set of people we met were militants. I led the team of Navy that destroyed 45 illegal refineries. We later sat with the militants in Abuja and discussed the way out of illegal refineries and make them participate in the refineries. No governor or minister is owner of any of the 44 licenses, except they used cronies. AMCON had to take over the refinery (Amakpe), NDDC and NCDMB have agreed to put money there and revive it. The Amakpe investor has not recovered to this day. CAC helped to screen the ownerships of the applying companies. Licenses are open to this day.”

He went on: “Some are using the licenses to dupe people and get money. I can run a modular with 20 people, not like PH Refinery that employs 1600 workers. Nafta can be made into perfumes which people go to Paris to buy at $120 or more. You can put the plant in another company and produce. There is a lot to crude oil. We have not exploited more than 20 per cent of oil.”

On viability, he said: “We have sun for solar, wind for power, etc. Europe and America are saturated, now looking for where to invest. Provide an environment and investments will flow. $8m duty was waved for a 10,000 bpd modular refinery. It is much sacrifice by FG. Why can’t we bring out the crude and gas now and use it to develop our nation? Dubai has done that. The nearer a refinery to source of crude the better, plus market. Do not bother about your local government, if you are applying for a license. Infrastructure is the key. Let common people apply. Those using others to apply may lose it at last because the operator may deny you. God has given us everything to grow.”