Ever since indications emerged clearly that Dangote Industries Limited, owners of Dangote Refinery in Lekki are determined to deliver the multibillion dollar scheme on record time irrespective of hiccups, shocks seem to have engulfed the spines of over 44 modular refineries licencees.
Checks showed that out of the 44 pretenders, only less than four are seen following up their construction activities.
Findings from the site of Eko Petrochem and Refining Company, promoted by Integrated Oil and Gas Group refinery in Lagos, showed that the company is serious towards delivering its planned 20,000bpd modular refinery in Lagos.
Recall that in 2017, the core investor, Capt Emma Iheanacho had announced the signing of a grant of $797,343 by the United States Trade and Development Agency for the project, saying “We have finished everything we need to do by way of planning.”
Capt Iheanacho had argued then that “To build a refinery is not an easy business; it involves a lot of planning, articulation and interaction with government officials, communities and other stakeholders. We have obtained the DPR’s approval to construct.”
“We need to raise finance. The problem is that Nigerian banks do not have sufficient capitalisation to lend one person that kind of money at the required single digit interest rate and for an extended period of eight to nine years. We are deeply into our fundraising activity,” he added.
Additional checks over the week further revealed that Niger Delta Petroleum Resources Limited is the company that has been able to establish and run a refinery.
The facility, which came with a 1,000 barrels-per-day refinery at Ogbelle, Rivers State, is said to have ample expansion opportunity to push up processing capacity to 6,000bpd and later to 11,000bpd.
Though details at the Department of Petroleum Resources indicate that there are a total of 38 proposed modular refineries with capacity ranging from 5,000 bpd to 30,000bpd, not much is currently happening amongst the licencees.
Some experts, who are in the know of the 38 licencees say their key challenge had been credit facilities due to harsh credit access terms and condition amongst local banks.
Besides, there are additional six conventional plants with a total capacity of 1.35 million bpd already licensed, but construction activities had been something else.
A credible source at the DPR confided in our correspondent that “Just as you pointed out, 24 out of the 44 companies were still sourcing funds as of April 2018 till date and there are strong chances that even their licences to establish refineries may had expired.
“However, as we speak, about 20 licences were still active in terms of allowable period of a valid licence by DPR terms and conditions,” the source averred.
But to find soft landing for several hopeful investors in the modular segment, in August, the Nigerian Content Development and Monitoring Board (NCDMB) said it was providing equity investment for the establishment of two modular refineries in Imo and Bayelsa states.
The federal agency noted that the 12,000 barrels-per-day modular refinery being constructed by Azikel Petroleum Limited in Bayelsa, which is expected to come on stream in 2021 got serious support from the agency.
The NCDMB also revealed recently that the 5,000bpd modular refinery being built by Waltersmith Refining and Petrochemical Company Limited in Imo was on track for completion in May 2020.
Whereas the National Refineries Special Task Force (NRSTF), set up by the Ministry of Petroleum Resources in 2012, had investigated about 35 greenfield private refinery licensees/applicants, and found out that only seven have reasonable potential, analysts concurred that majority of the modular refinery pretenders lacked both the financial muscles’ and requisite experience and background in petroleum refining and marketing.
According to NRSTF, “Their technical capability is rather doubtful and their ability to attract the quantum of funds required for refinery projects, running into billions of naira, is questionable.
“Besides, in many instances, potential financiers evidently insisted on crude supply agreements at rates below international market prices, owing to the prevalent subsidised products pricing regime, as a condition for further consideration of funding applications.”
Business Hilights recalls that Aliko Dangote’s refinery is coming with a massive capacity of 650,000bpd which would on delivery stand as the world’s biggest single-train facility.
Fact checks have further revealed that aside incidents of smuggling across the West African states, the management of Dangote Industries Limited has at various occasion averred that the facility will among others, sustain Nigeria’s requirement of all liquid products, such as petrol, diesel, kerosene and aviation fuel.
Just on July 29, Sinopec Corporation revealed that Dangote refinery’s world’s largest atmospheric tower, a piece of equipment that will process crude oil for, had set sail from China and will arrive any time from next month or so.
Observers seem to have tied such intimidating news coming from Dangote Refinery and the harsh experience of modular refinery hopefuls to the fact that they may be further discouraged that Dangote may shrink the market and leave them with little or nothing after all.
