It seems the quest for the end of petroleum scarcity in the country may not come soon, as the Department of Petroleum Resources, DPR, said the process to get modular refineries on stream takes up to two years to be completed.
Speaking to Sweetcrude, Deputy Director, Engineering and Standards Division, DPR, Dr. Olumide Aladeke, said Nigeria is massively importing petroleum products due to the low production capacity of the refineries.
He said, “The big question is not how long Nigerians should wait, but how soon can these licensees get the refineries on stream. “It is after the refineries are on ground that we can begin to talk about how to flood the market with internally produced petroleum products.
“And so, it is pretty too early for us to start talking of when they will start production. Anyone of these licensees that will be so fast, will need a minimum of 24 months to put anything on ground; that is assuming the money is available, because there are several stages of construction.”
“However, we are looking forward to proffer solution and idea by organizing a forum where potential financiers can come in to see whether there can be a synergy that can make the system work. “I know there was one that came up in March in Lagos, which was organised by Financial Bridge.
“They want to have a kind of international standard where the proponents for refinery whether modular or otherwise can come together with potential financiers from different nations and probably the Nigerian banks will also participate to see how this can be actualised in due time.”
Going down memory lane, he further noted that “Yes, months ago, we gave some 22 licenses to companies that should establish modular refineries and another three for the standard full refinery. “As at now we have started some kind of review of how far they have gone. But to be honest with you, nobody can put up a refinery in six months. The licenses we have issued are the first stage which is license for refinery.”
He explained that the statutory procedure is of three stages. “The first, is the license to establish and that gives them the opportunity to perfect their feasibility study, improve their engineering and do some detail works that will allow them to get the approval to construct.
“So it is after the approval to construct that we can begin to look at things like when they will commission or when to withdraw the license. Right now, what most of them are doing is perfecting their engineering, perfecting their logistics on how to get their crude, their site and the finance, which I think is the major issue.
“If you recall in this nation, we have been on this for long and the recurring decimal of the challenge for this proponent is the finance for such project. “But for these licences that were given months ago, review just began and hopefully at the end of the exercise, we will have a comprehensive status report that we can share.
“But right now we won’t want to give ‘piece meal kind’ of information on what they are doing or not doing, as we don’t have the comprehensive picture until we have finished the comprehensive session with each of them ongoing,” he added.
The team expressed satisfaction on the commitment of these operators, adding that what drives the business is the market. “Presently, if we look at the environment in Nigeria, the market is there. And so, for anybody to come out and say he wants to build a refinery he must be serious because he knows there is something there for him, but the issue is how to get it built.
“A refinery is not cheap, that is the truth. It is very expensive to put up and you need so much in terms of commitment from your own personal side, because if you go to a bank or a financier they need you to put down something.
“It is like I need a loan from the bank and they give you their conditions. If you then agree and requested for N10 million, all you need is 30 per cent of what you are asking for or you must give collateral that will guarantee that you for such transaction.
“Now, imaging a refinery of about $500million, that represents a small refinery with the capacity of about 6,000 barrels, how much can that individual put down as a collateral that will allow the financiers to carry out the transaction?
“Moreover, I think we have only the Niger Delta Petroleum Company Plc, which has been able to venture into this since 2003 and they were only able to install 1,000 barrel capacity refinery, and that is an operator. “And so, if you look at other people who are not operators who are coming in, you will ask what they can showcase to encourage a financier to say come and take that huge amount of money,” he added.