Government yesterday activated another policy strategy to permanently address intractable fuel shortage in the domestic market by flaunting commercial incentives at investors that want to build modular refinery in the country.
Federal Government has declared full policy and commercial incentives for investors that wish to build modular refineries in the country, promising guarantee of attractive return on investments.
Industry Regulator, Department of petroleum Resources (DPR) told a crowd of investors and equipment manufacturers at forum hosted at Eko Hotel and Suites, Lagos, that despite the vagaries of price regulation in the country, investors would be given the liberty to sell their products at international price parity.
The Modular Refinery Programme, The UNION reports, is part of the initiatives of the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, to permanently address intractable fuel scarcity and associated cost escalation in meeting the nation’s domestic energy needs.
The programme makes it possible for interested investors with limited funds to make low budget entry into the business, create direct and indirect employment, create associated and ancillary opportunities in-country and grow indigenous capacity for crude oil processing.
Prime target of the programme is to displace large scale importation as the primary source of fuel for the domestic economy and place the industry in the efficient hands of the private sector to achieve the level of efficiency that currently drive upstream oil and gas industry operations.
Among the incentives flaunted by the government include reliable, sustainable and cheap sources of crude oil feedstock for the refineries. Others are reduction of licence fee from previous one million dollars to $50,000, freedom to locate plants at numerous tax free zones in the country as well as liberty to explore regional and international markets.
Deputy Director in charge of Technology and Standards ay DPR, Mr. Alfred Ohiani, who hosted forum however warned that the current exercise would be different from the 2004 refinery licences in which, he said, the beneficiaries never went to site but target crude oil lifting from the Nigerian National Petroleum Corporation (NNPC).
It would be recalled that government had in 2004 issued 24 refinery licences to indigenous companies that indicated interest to play in the midstream sector of the industry but only Orient Petroleum Resources (OPR) and Amakpe Refinery Limited were able to proceed to sites in Anambra and Akwa Ibom States respectively.
Whereas partnership crisis bogged down the Amakpe Refinery project in Eket, Akwa Ibom State, the Orient Refinery project has been progressed by the promoters up to installation stages. According to Mr. Ohiani, other 2004 licensees could not meet the requirements that would enable DPR issue them approval to construct (ATC). He said the licensees could not muster the required funding to realise the projects due to weak state of the local financial institutions at the time.
Some of them, according to him, merely used the license as a ticket to demand allocation of crude feedstock which, he said, they wanted to trade on.
“They abandoned the plans when they were asked to go and procure their crude from the market,” he disclosed, adding that subsequent revalidation of their licences could not yield any expected result from the licensees.
On the concerns expressed by the investors over the recent directive by the Central Bank of Nigeria (CBN) to limit dollar access to local businesses, Mr. Ohiani stated that the oil and gas business is denominated in dollars, adding that even the government receives its taxes and royalty from the industry operators in foreign exchange payable from any part of the world.
He assured that procurement of foreign exchange and conversion to local currency are a function of financial services obtainable within the domestic financial system.
He urged the investors to take advantage of the entry of indigenous companies in the oil and gas production business in sourcing their crude feedstock, adding that NNPC holds control of 60 percent of total crude oil production from the country.
With over 2.4 million barrels per day of national production, he said, NNPC’s equity production remains in the range of 1.6 million barrels per day, enough to meet total domestic refineries’ requirements.