The Federal Government has issued 45 licenses to private companies for the construction of refineries including modular refineries and as the licenses expire this year, many will fail to reach commissioning, analysis shows.
All the licenses issued till date have a combined capacity to refine 2.15million barrels of crude oil a day, slightly lower than Nigeria’s current output, and government officials say, the refineries, when completed with turn Nigeria into West Africa’s refining hub and cut billions of naira, spent yearly in importing refined products.
Waltersmith Refining and Petrochemicals modular refinery with a capacity to refine 5000 barrels per day with a key equity investment from the Nigerian Content Development and Monitoring Board (NCDMB) is expected to be completed in May 2020.
The construction of the 7,000bpsd OPAC Refinery in Umusetti, Delta State, and 10,000 bpsd Niger Delta Petroleum Resources Refinery expansion project in Ogbelle, Rivers State, seem to be nearing completion but these are the exceptions.
According to a document obtained from the Department of Petroleum Resources website, seven of the companies granted licenses are expected to break ground before they expire. Our analysis shows that perhaps three or four may succeed before the year runs out.
Eighteen of the licenses were classified as active but analysis shows that barely five are can boost of any real work on site. The 650,000 barrels a day Dangote Refinery is included in this category but even that will not be ready this year as completion date has been moved to 2021. Yet, already, 13 of these licenses have expired already and many are still classified as sourcing for funds.
Licenses to Establish issued to Eko Petrochemicals for a 20,000 capacity modular refinery and 24,000 refinery capacity for Kainji Resources have expired since 2017 even if they have FEED approval from the DPR.
Fifteen licences issued to various companies including Sifax, Grifon, Aiteo, Masters Energy and others have since expired but the dream of a completed refinery is yet to be realised.
Yet these refineries do not look like they will come on stream this year implying that Nigeria will still spend over N700million a day to import petrol.
The NNPC refineries do not fare better. The three refineries lost a total of N123 billion last year, the corporation said in its October operations and financial report.
The refineries, which are located in Port Harcourt, Kaduna and Warri, have a combined installed capacity of 445,000 barrels per day but have continued to operate far below the installed capacity.
Analysts say that until Nigeria removes a subsidy on petrol, many of these refineries will not see a path to profitability which will help make the case to investors for the critical funds required to complete them.