Indications have emerged showing that Nigerian National Petroleum Corporation, NNPC, is emplacing measures to attract 20 companies to make substantial investment worth $20 billion towards meeting the Federal Government’s target of increasing refining capacity in the country.
According to Investigations, NNPC in the past few weeks has been engaging with the investors with a view to educating and assisting them to prepare various packages required in the process of applying for licenses.
On completion of the engagement, the promoters of the modular refineries would be equipped with vital knowledge to submit their applications to the Department of Petroleum Resources, DPR, which is vested with the responsibility to issue such licenses.
Confirming the development at a forum on modular refinery in Lagos, NNPC’s General Manager, Refining Directorate, Mr. Ahmed Danladi, stated that the corporation decided to play the role in order to guide potential investors eyeing the sector.
He explained that taking the responsibility became necessary, since many potential investors did not know much about the sector.
Danladi pointed out that, “Building a modular refinery is not cheap. “It cost millions of dollars to establish a modular refinery with 10,000 barrels per day, bpd.
“But building a 100,000 bpd to 150, 000 bpd modular refinery can cost between $1 billion to $2 billion.
“So, investors need to have adequate funds to go into business”.
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In his contribution, Associate Director, PricewaterhouseCoopers Limited, Mr. Olumide Adeosun noted that there was a great need for investors to invest in refining, targeted at reducing dependence on importation.
“Current demand for refined products in the region is estimated at 39 billion litres and refineries such as SIR (Ivory Coast), SOGARA (Gabon) and SAR (Senegal) cannot meet this.
“There is an opportunity for potential uptake by neighbouring countries if the market has Nigeria’s refined products readily available.”
“Imports currently account for 90per cent of Premium Motor Spirit (PMS) supply and 60per cent of Automotive Gas Oil (AGO) supply.
“Nigeria consumes over 17 billion liters of PMS annually and consumes over 3 billion liters of AGO.
“Transportation and power are the major drivers of demand for PMS in the country while increasing the demand for self-generation options such as AGO powered generators is the major driver of AGO demand,” he added.
The Managing Director of Niger Delta Petroleum, Dr. Layi Fatona, urged local and foreign investors to invest in the sector, adding that modular refinery was profitable.
Recounting his experience in operating the Ogbele-based plant in Delta State, Fatona said investment could be recouped within the first few years.
He said, “The Company is planning, as part of a two – five year plan to expand capacity fivefold to 5,000bpd which, if we assumed a 60% operational efficiency rate, equates to revenues greater than US$3m per month, or US$36m per annum.
“This would require Capex of US12m to achieve, with a payback of around 6 months.”
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