Nigeria’s Federal Government is now an evangelist, willing to convert owners of illegal refineries into legit business cooperatives to make up for the failure of the three-and-half refineries owned by Nigeria National Petroleum Corporation, or Company Limited, that gulps so much money without producing one litre of petroleum products.
This is a more profitable and humane way of dealing with the issue of illegal refineries that emit dangerous soot that kills people. By converting those hitherto regarded as criminals into cooperatives, the government will be gaining so much.
Sharon Ikeazor, Minister of State for the Environmental, avers that “the much talked about Port Harcourt soot is caused by the activities of artisanal (euphemism for illegal) refineries.”
The criminal turned legit entrepreneurs will escape poverty, significantly reduce cost of monitoring illegal refineries, raise Nigeria’s Gross Domestic Product, reduce unemployment, pay taxes to the government and make petroleum products more available. And no one will find it necessary to break the crude oil and petroleum products pipelines anymore.
More importantly is that Nigeria’s import bill will significantly reduce. Also, Nigeria should take advantage of its large-scale production to be able to export petroleum products to West Africa in the medium term, and other parts of Africa, in the long-term, and earn forex.
If the refineries become more stable, they should be able to transit into bigger and more conventional refineries, and add production of fertilizer for use in the agricultural sector of the economy. Of course, there are other advantages to these capabilities.
This is a classic case of a win-win situation. The new entrepreneurs and their employees will become responsible and respected members of the society, the government will be relieved of the security burden, and have more revenue to discharge its welfare responsibilities to Nigerians.
Whereas the NNPC refineries have the capacity to process 445,000 barrels of crude oil per day, which they are not achieving at all, the privately-owned Dangote Refinery, in Lekki, Lagos State, is expected to process up to 650,000 barrels of crude oil per day.
When Dangote Refinery comes upstream in September 2022, as promised by its President, Aliko Dangote, it will be the largest single-train refinery in the world. It is expected that it will run efficiently because it is a private enterprise that won’t tolerate bureaucracy.
One sometimes wonders why those shameless Nigerians who earn remunerations while pretending to be working in NNPC do not ever think they should be patriotic for once by resigning and going back to wherever they call home.
If they go home, the money wasted on them can be diverted to more useful purposes. All they do these days is no more than superintending the oil depots, and both the 4000 kilometres of crude pipeline and the 5000 kilometre petroleum products pipeline.
These responsibilities can be discharged by people who do not necessarily have to be very expensive personnel. To mention just one, Mele Kyari, the Group Managing Director of NNPC, is overqualified, and therefore, should be replaced by someone without his intimidating curriculum vitae. A brilliant DHL alumni, and PhD, should be able to run the depots, trucks and the crude oil and finished product pipelines
Brilliant personnel with a logistics background should be able to do the job that any GMD of NNPC does. What obtains in NNPC is a Rube Goldberg, a complicated device that performs simple tasks in an indirect and convoluted manner.
Minister Ikeazor says the policy is “in a bid to find alternative sources of livelihood for artisanal refiners and to encourage them to disengage completely from illegal activities.” “E sese ns’oro ni,” now you are talking.
In addition, “other refiners that cannot be absorbed in the pilot modular refineries will be congregated into business clusters… (And) Alternative Funding for the Hydrocarbon Pollution Remediation Project (will) be utilised to set up businesses for them.”
“Other refiners that cannot be absorbed in the pilot modular refineries,” may be interpreted as a loose term for three more modular refineries in each of Ondo, Abia and Imo states, not in the South-South region, but where crude oil is also mined.
Some however, wonder if this policy will not hinder or compromise the Petroleum Industry Act of 2021 which provides for the commercialisation, or part-privatisation, of NNPC, which has been transformed into Nigeria Petroleum Company Limited.
Others argue that it’s a welcome idea for the Federal Government to come up with such an initiative that may also be an immediate solution to the problem of scarcity of petroleum products.
If domestic supply of petroleum products is successful through this initiative, the vexing matter of fuel subsidy would have been overcome and the government will have no cause to invent several euphemisms, like under recovery of costs, to explain the need for the disputed fuel subsidy.
Two privately-owned modular refineries are under construction in Egbokor and Ologbo in Orionmwon and Ikpoba Okha Local Government Areas of Edo State in the Niger Delta region. Another was to be established in Agbowa-Ikosi in Lagos State. But it doesn’t look like work has started on the site which yours truly visited sometime in 2018.
Maybe the decision to seek local initiative to tool the modular system will help PRODA, or Projects Develop Agency in Enugu, Enugu State, live up to its statutory mandate of conducting scientific, engineering and technological researches to facilitate domestication of appropriate technology for Nigeria, and become useful after all these years of winking in the dark.
A modular refinery requires significantly less cumbersome capital intensive investment to set up. It’s much unlike the traditional big, full-scale, refining facilities, like the unwieldy ones that NNPC appears unable to run.
Experts say that a modular refinery that can process between 100,000 and 200,000 barrels per day may cost anywhere from $100 to $200 million. Prof Godwin Igwebueze, of University of Port Harcourt, argues that the cost of importing 30 days’ supply of fuel can build anywhere from five to 10 modular refineries. Some experts say Nigeria consumes 60 million barrels of petrol per day.
The initial process, or what is called “Crude Distillation Unit,” allows for simple distillation of crude oil into octane naphtha, diesel, kerosene and residual fuel. This is just a simpler way of achieving what NNPC has been unable to achieve over the years.
The more annoying part is that the NNPC keeps asking the Federal Government for huge amounts for what it describes as turnaround maintenance. A friend says it’s more like rerouting Nigeria’s money into the pockets of some people, like a guided missile.
For those who would like to know, and for the purpose of this discourse, the PIA establishes the Nigerian Midstream and Downstream Petroleum Regulatory Authority that has statutory responsibility for the technical and commercial regulation of midstream and downstream petroleum operations of the oil industry.
MDPRA should regulate the domestic aspect of the Nigerian oil industry, which includes the refineries, sales outlets, and the crude and finished products pipelines– and the modular refineries, players in the refining sub-sector of the downstream, or domestic, oil sector.
Government deserves accolades for this initiative– if it sees the light of day!
