FG to revamp four refineries with local technology

The Federal Government is pushing for the use of local technology for the rehabilitation of the four refineries located in Port Harcourt, Kaduna and Warri aside sourcing for third-party financiers for their revamp.

The government also says that international oil companies that are joint venture partners with the Nigerian National Petroleum Corporation in the production of crude oil will soon be mandated to first provide crude for local refining before shipping it out to the global oil market.

The Minister of State for Petroleum Resources, Ibe Kachikwu, stated these in his latest podcast on the refineries and their production capacity. The updated podcast was obtained from the Federal Ministry of Petroleum Resources in Abuja on Friday.

Correspondent had reported on Thursday that the refineries were performing at a combined capacity of about 15 per cent.

The Federal Government had explained that the refineries were producing at about 10 per cent when the current administration came to power, adding that the combined capacity utilisation of the facilities was currently at 15 per cent.

But in further updates from the podcast, the minister said he had directed one of the agencies under the ministry to support a tertiary institution that came up with a local model to help revamp the refineries.

Kachikwu, who was impressed by the model from the institution, stated that the Federal Government would use the technology component from the Ahmadu Bello University, Zaria, for the rehabilitation of the refineries.

“Last week, a team from Ahmadu Bello University brought a model of refining equipment. I was so excited about it and I directed one of my agencies to give both the financial muscle and support that they need to be able to grow that local IT and see how we can push the technology component on this. That is how concerned we are about our refineries,” he said.

The minister added that funding from third-party investors would be used to raise the combined capacity utilisation of the refineries from 15 per cent to about 90 per cent.

He said, “What we’ve done so far is that we’ve been able to get His Excellency’s (President’s) approval to find third-party funding through a debt structure to be able to get these refineries back to working form. They will work with the NNPC and get these refineries from 10 per cent capacity to about 90 per cent performance capacity.

“Today, the concept has been agreed and approved, the financing structure is largely been agreed, the financiers have largely been identified, the contractual processes are ongoing to reach the terms of the financing. We have also identified the initial builders of the refineries to be the contractors using the financing that is going to be raised from third-party financiers.”

He observed that the uncertainty in the international refining market posed a challenge to the rehabilitation of the country’s refineries, coupled with the non-functional plants in the Niger Delta, which were costing the government so much money to maintain.

On the provision of crude oil by the NNPC’s joint venture partners to local refiners, Kachikwu stated that a policy was underway to enforce the initiative.

The minister explained that if the country succeeded in halting the importation of refined petroleum products, it would save up to 40 per cent of the total consumption of foreign exchange.

Kachikwu said, “As we go through the crude oil sale policy of this country, we must get to a point where even those who produce crude as joint venture partners must take the responsibility of providing crude first to the local refineries. We are going to have to make that a policy.

“It does not make any sense for us to ship out all the crude we produce to the world and leave our cities scurrying for refined imported products. If we succeed in stopping the importation of refined petroleum products, we will be saving 30 to 40 per cent of the foreign exchange consumption in this country, which is used for the importation of refined petroleum products.”

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