Lack of funds threatens 23 refineries’ construction — Investigation

Lack of funds threatens 23 refineries’ construction — Investigation

Lack of funds is threatening the construction of 23 new refineries in the country, investigation by our correspondent has revealed.

Twenty private firms were given licences to build refineries in 2000, while the Nigerian National Petroleum Corporation got approval for the construction of three new refineries in Lagos, Kogi and Bayelsa states.

But reliable sources at the Department of Petroleum Resources, who would not want to be identified because of the sensitive nature of the matter, told our correspondent on Friday that all the licensing issues for the refineries had been concluded, but fund was delaying the project.

It was learnt on Friday that none of the 20 private refineries had started construction work.

Our correspondent gathered that initially, the DPR had demanded up-front payments from the owners of the private refineries based on their intended refining capacity; but only one of the 20 operators met the condition.

The DPR, it was learnt, had to relax this condition.

And a top official of the agency said, “The reason for this is simple; they don’t have the money needed to build these refineries. Nigerian banks are not ready to finance the projects. Their owners are required to raise some funds locally before seeking foreign partnerships. But it is unfortunate that they can’t raise the little proportion required of them locally.”

A source at the NNPC also said after receiving an approval from the DPR to build three Greenfield Refineries, it had not commenced any construction work.

When our correspondent contacted the NNPC on the matter, the Acting Group General Manager, Public Affairs Division, Mr. Fidel Pepple, replied in a text message that, “All preliminary works and feasibility studies have been completed.

“All the three refineries are considered viable. An investment consortium is being put together while awaiting government’s go-ahead. Completion of first refinery is envisaged for three years after Final Investment Decision.”

The construction works on the much-awaited three Greenfield Refineries were expected to commence in July 2012, which is one year behind the original schedule.

But with the current financial challenges facing the Federal Government, sources in DPR admitted that the July date was not feasible.

However, no future date had been given as at the time of this report.

The NNPC and the China State Construction Engineering Corporation Limited in May, last year, signed an agreement for the joint sourcing of funds for the construction of the three new Greenfield Refineries and a petrochemical plant in Nigeria under a$28.5bn provisional deal.

From the outset, the plan was that each of the new refineries would be able to process around 250,000 barrels of oil a day, potentially meeting Nigeria’s estimated need of 750,000 barrels per day over the next 10 years.

At a recent Nigeria Refining Capacity Summit held in Akwa Ibom State, organised by the House of Representatives Committee on Petroleum Resources (Downstream), it was held that the setback experienced in the projects was the major factor contributing to the country’s inability to attain self-sufficiency in petroleum products refining.

The legislators therefore called for a remedy of the situation and demanded urgent solutions to the nation’s ailing refineries with their abysmally low refining capacity.

The lawmakers described the current state of the refineries as a confounding contradiction and oddity, saying, “Nigeria, even as the eight largest exporter of crude oil and the 12th largest producer of crude, still ranks very prominent among countries that continue to import refined petroleum products.”

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