Four modular refineries are set to come on stream before the end of this year with over 25,000 barrels per day (bpd) refining capacity spurred by Federal Government’s duty waivers to operators, but the troubled Apapa ports threaten these plans.
Investigation shows that the benefits of a duty waiver are entirely wiped out by exploitative charges required to settle various port officials and security personnel to get into the ports to take out containers.
An operator told BusinessDay that while he spent about N500,000 to bring a container from China to the Apapa port, he spent over N1.2 million to take the same container out of Apapa port to Sagamu.
“The government says it is promoting ease of doing business but the situation at the ports is worsening the ability to do business and enriching fraudulent security officials,” an importer told BusinessDay on the condition of anonymity.
Hundreds of trucks, some bearing containers queue up for months to get access into the ports and companies hard pressed for time pay a premium to get ahead, creating a racket for security agencies tasked with orderly movement into the ports.
Some operators, BusinessDay learns, now move their containers through barges from Orile into the Apapa port in order to bypass the long queues to get into the port. This has raised cost for importers as statistics show that it costs more than N1.2 million to transport a 40-foot container from Lagos to Benin City.
Meanwhile, four modular refineries including Waltersmith Refining and Petrochemicals, OPAC, Edo Refineries and Petrochemicals could start producing refined products before the end of the year.
Waltersmith Refining and Petrochemicals modular refinery has a capacity to refine 5,000bpd, and a secured key equity investment from the Nigerian Content Development and Monitoring Board (NCDMB) is expected to be launched in September.
The company’s refining business is divided into two phases: Phase 1 is the delivery of 5,000bpd modular capacity refinery located near the existing flow station and will process the around 6,000bpd currently produced by the upstream business to the readily available market in the south-eastern part of Nigeria, the company said.
“It is expected to contribute about 271 million litres of refined products including Diesel, Naptha, HFO, and Kerosene annually to the domestic market and create both direct and indirect jobs, particularly within the host communities,” according to a statement from the company published on its website.
The second phase is the delivery of 25,000bpd crude and condensate refinery, which is an upgrade on the 5,000bpd modular refinery. The project is still at an early stage of development but is designed to produce the following products: gasoline, diesel, LPG, kerosene, and aviation fuel.
OPAC Refinery, being constructed in Delta State, promoted by Pillar Oil Limited, Omsa Limited, and Astek Limited, is also expected to be completed before the end of the year. The refinery upon completion will be able to process at least 7,000bpd.
Pillar Oil will be supplying about 350,000 tons of crude per annum to the refinery once the facility begins operations.
OPAC will produce naphtha, kerosene, diesel, and fuel oil fractions upon completion. The refinery will have a storage depot for crude and finished products.
The Niger Delta Petroleum Resources Limited 1,000bpd refinery located in Rivers State could see its capacity upgraded to 5,000bpd.
The plant, which produces only diesel, in 2014 the company celebrated the 1,000th Diesel Truck Load Out from the Mini Refinery. Currently, an expansion of the plant is ongoing to increase processing capacity to 11,000bpd, the company said on its website.
Aside from this, the 6,000bpd Edo Refinery and Petrochemicals, a private modular refinery located at Ologbo, Ikpoba Okha Local Government Area of Edo State is billed for commissioning next month.
The Edo Refinery and Petrochemicals is owned by AIPCC Energy Limited, a joint venture between AFCOM and Peiyang Chemical Equipment Company of China (PCC) and was built at the cost of $10.2 million. It produces diesel, Naptha and Fuel oil (LPFO).
When completed, the Edo Refinery and Petrochemicals aims to supply 20 percent of Nigeria’s diesel, save over $350 million in foreign exchange yearly, earn over $125 million from export of Naptha and meet Nigeria’s 100 percent LPFO demand.
BusinessDay’s analysis shows that only these refineries out of the 45 modular refinery licences approved by the Federal Government look set to be completed, though many of these licences would expire this year.
All the licences issued to date have a combined capacity to refine 2.15 million barrels of crude oil but challenges including an inefficient port make it unlikely that they will be constructed.
