FG And Modular Refineries

The Federal Government recently signed a Memorandum of Understanding (MoU) with an oil consortium, Vulcan Petroleum Resources Limited of the United States of America and its Nigerian counterpart, Petroleum Refining and Strategic Reserve Limited, to establish six modular refineries in Nigeria.

According to the Minister of Trade and Investment, Dr Olusegun Aganga, who signed the memorandum on behalf of the Federal Government, two of the refineries capable of refining between 30,000 and 60,000 barrels of crude oil per day are expected to be completed within the next 12 months.

The $4.5 billion deal would ship refineries built in the United States and sited at the coastal areas of the country. The refineries are expected to produce millions of litres of petrol, diesel, Kerosene and Low Pour Fuel Oil (LPFO) enough to meet local consumption need.

On completion, the six modular refineries, with a combined capacity to refine 180,000 barrels of crude oil per day can produce up to 30 million litres of products for the Nigerian market per day.

The Tide welcomes the initiative as we believe that it is a move that can save the nation from the continuous importation of refined petroleum products. The new refineries will also provide jobs, save foreign exchange and ultimately facilitate the deregulation of the industry.

If properly executed, this initiative will not only bring to an end the corruption associated with the importation of products, but would make Nigeria add value to the product and make the fullest gain from the industry.

While we have no doubt that this initiative will not end up in the shelves likes other MoUs, we fear the prospect of the politicization of its siting and operations to the extent the expected benefit could be lost.

Even as we expect the modular refineries to arrive as soon as possible, we think the Federal Government should be concerned over the failure of private investors to build refineries in Nigeria years after the issuance of licenses.

It is on record that the Federal Government issued licenses to some private investors for the same modular refineries some years ago, but nothing has happened till date. We expect that government would find out why and even assist those investors to take off so that Nigerians can even export more refined products than crude and buoy the economy.

Meanwhile, the Federal Government must adequately prepare the ground for the effective utilization of the refineries when they come. Some of the issues that should be addressed are the need for spare parts and maintenance warranties. It should not be allowed to suffer the fate of the old refineries.

Also critical is the location of these refineries that should be decided immediately with a view to attaining community support and acceptance. It is important that the security of the refineries and community interest are assured to avoid any delay or conflicts.

Perhaps, it should also be noted that the introduction of the modular refineries should not become the final demise of the old refineries. Instead, efforts should be made to make them work at optimum capacity and help to save Nigeria from the difficulty of having a hold on the industry.

Clearly, this is one of the initiatives that can bring about a lot of changes in Nigeria. If for nothing else, it will effectively eliminate scarcity, discourage and indeed make unprofitable the operation of native refineries and help protect the environment from illegal petroleum activities.

We hope that all necessary steps would be taken to see to the timely realization of this initiative because it will have many enemies.