19 private refineries’ licences expire, stalls bid for petrol self-sufficiency by 2019

Expectations that private and modular refineries would help Nigeria achieve petrol self-sufficiency by 2019 may have been dashed.

This is because all the operating licences the Department of Petroleum Resources (DPR) granted to investors expired at the end of 2017.

With an anticipated capacity to process over 1.352 million barrels of oil per day (bpd), the country would have saved over N2.7 trillion in importation, had the refineries come on stream by 2019.

Data from the National Bureau of Statistics (NBS) show that Nigeria in 2017 spent N2.07 trillion to import petrol between January and September.

The Nigerian National Petroleum Corporation (NNPC) has four refineries. With a combined installed capacity of 445,000 bpd, the facilities have not been able to produce 10 per cent of the country’s demand of 36 million litres per day.

Consequently, Nigeria has relied on import, becoming trapped in the burden of fuel subsidy for many years.

In the current private refineries’ status report obtained by The Guardian, 19 holders of the 25 licences given by the DPR in 2015 are yet to commence projects, while six others have moved from Licences to Establish (LTE) to Approvals to Construct (ATC) levels.

Of these, only Dangote Oil Refinery Company (DORC) and Amakpe International Refinery Inc., in Eket, Akwa Ibom State, have begun projects.

Amakpe, with a 12,000 bpd capacity, had its fabricated process units inspected and certified. It is yet to move any further. The 100,000 bpd Resource Petroleum & Petrochemicals International Inc., in Ibeno, Akwa Ibom, has also signed a contract with Foster Wheeler France and Axens for Front End Engineering Design (FEED).

DORC, according to DPR, has progressed beyond refinery development project to equipment fabrication stage.

The facility, due for commissioning, next year, would add over 650,000 bpd to domestic refining capacity and save the country from capital flight.

The DPR, however, said some of the licence holders have applied for renewal. “DPR has not withdrawn any licence. The issue is that most of the expired licences are under review for renewal.”

According to DPR guidelines, the validity of a licence to establish a hydrocarbon process plant shall be two years, after which it shall lapse. In the event that an ATC expires without actualisation of the project and the holder is still interested in completing the project, the investor would have to apply for a re-validation.

The Secretary, Association of Private Refineries Licensees, Eche Stephen Idoko, said the expiration of some LTC licences would not stop modular refineries from helping the Federal Government achieve its target of self-sufficiency by 2019.

He said many of the private projects have reached advanced stages and that the investors were getting necessary support from the Federal Government and the Ministry of Petroleum Resources.

Idoko said that the Federal Government had directed the Bank of Industry (BoI) to assist the refineries with loans. “We are still talking. And very soon, many of our members will begin to benefit. A lot of our members are not waiting for the loan; they are also making private arrangements to finance the projects.”

He said Clairgold Oil and Gas Engineering Limited, which is constructing a 20,000 bpd modular refinery in Koko, Delta State, has reached a significant level. He noted that the company has an objective to reduce the country’s importation of refined petrol and boost the Gross Domestic Product.

He said the procurement, engineering, and fabrication of the modular refinery and other utilities have commenced, and operations would begin in the fourth quarter of 2018. He added that the Niger Delta Petroleum Corporation has also commenced expansion of its refinery in Delta State.

Affirming that the 2019 deadline for Nigeria to stop the importation of petrol is realisable, NNPC’s Chief Operating Officer, Refineries and Petrochemical Autonomous Business Unit, Anibor Kragha, said potential financiers have been identified for a revamp of the nation’s refineries.

The entrance of Dangote’s refinery will make Nigeria an exporter of petrol, said Senior Technical Adviser to the Minister of State for Petroleum Resources, Rabiu Suleiman.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said modular refineries would complement government-owned refineries and ensure adequate supply of petrol in the country.