18 August 2008
interview
Usua Amanam, President and Chief Executive Officer of Amakpe International Refinery Limited in this interaction with reporters in Lagos recently on the state of work at the Amakpe private refinery in Akwa Ibom, said it will come on stream next year. Excerpts:
What informed your decision to set up Amakpe International Refinery in Nigeria, considering the huge capital involved and the bureaucracy in getting approvals for such a venture in Nigeria?
You see, I have always looked at Nigeria as an island surrounded by water, and where the people on that land surrounded by all the water do not have the water to drink. It is as bad as that. It has been so difficult for Nigerians in terms of oil and refined products. We are so blessed in Nigeria with crude oil to the extent that we ship this to other parts of the world, and they have to refine it in the United States and many other parts of the world and bring it back to us.
So when the opportunity came for private investors to come into the petroleum refining industry, we saw the challenge and we applied for a licence which was granted by the Department of Petroleum Resources (DPR). Amakpe Refinery was one of the 18 granted provisional licences to set up refineries in different parts of the country.
But let me tell you that the process is not so easy as it has taken us years to get to this level. Like I said, 18 companies applied for this licence initially and today, only Amakpe Refinery has scaled the last hurdle and we are now fully on ground. I must commend here the role of Sterling Bank, as they have always been with us since we started the feasibility study for the project till we got the bank guarantee for the U.S Ex-Im Bank facilities. That transaction was very successful as we got $10 million from the US Ex-Im Bank for this project, and we give all the kudos to Sterling Bank for their efforts.
We also commend the effort of the Akwa Ibom State Government which has also invested the sum of $10 million in this project just as private investors, we have committed several millions of dollars into it.
Since we got the licence, the Federal Government and the Department of Petroleum Resources have set certain conditions for us and I am glad to tell you that we have met these conditions.
The first condition for us was to ensure 50 per cent completion of the mechanical aspect, that we have already surpassed within one year of getting the licence. As at June this year, we have met and even surpassed this particular target. We have also received a guarantee for the money we put on ground as a surety for meeting that target would be returned by the Accountant- General of the Federation, having revived the DPR's pass mark in that direction.
So without the help of Sterling Bank, we would not have been able to go this far and we also have the assurance of the management that they are still very much with us in this quest to realise our goal. Our goal is to refine 6,000 barrels per day in the first phase while we progress gradually to the full 12,000 barrels refining capacity for the second phase. We hope to hit the 12,000 barrels in two years and 30,000 barrels by the fifth year at most. In the seventh year, we should be looking at 50,000 barrels capacity.
The refinery is in modular form manufactured in Houston, Texas, United States of America. It will be shipped to Nigeria and installed in Eket, Akwa Ibom State.
What has been your experience in the pursuit of this adventure and what are the things you would want the Federal Government to put in place which could attract more private investors to this kind of venture?
The process with the regulatory agency is very tough and you really have to spend so much time in gathering and processing all the necessary documents, there is a lot of paper work involved.
I think the government should make it possible for the banks to give loans and also guarantee huge ticket transactions such as this. This will make it easy for local investors to get funding as no one could do this alone. For example in the United States, the government facilitates the establishment of refineries by assisting private investors to do so. Our government in Nigeria can also assist by providing guarantees to the banks here who will also in turn, provide the necessary facilities for the private investors who plan to do genuine business in the country.
I still remember about 25 years ago when I wanted to set up a private industrial firm in the United States, all I required was just a mere 10 per cent of the total sum. The government provided the required guarantee for the bank that financed the remaining part of the project. That is the type of assistance we need to really grow the Nigerian economy.
For me, I must state that without the help of Sterling Bank, which provided the required guarantee for the US Ex-Im Bank, it would have been pretty difficult to talk about Amakpe refinery today. It would have been very difficult for us to move forward with a project like this.
Given the restiveness in the Niger-Delta region and the fact that oil installations are targets for the militant attacks, are you bothered about the happenings in that area and that this could affect your plans?
We are an indigenous company and we are part of the Niger-Delta, as a matter of fact, I am a son of the soil and everybody supports this project and it is what they have all been craving for. I can assure you that the people of the Niger-Delta are really very interested in working with us on this project and they are very happy about it. They see it as an opportunity to really be part of the oil and gas process in that region.
One of the things we have realised is that the people of this area too need some form of participation, and this is a very crucial effort in participating downstream. When you cannot participate upstream, then this is an opportunity for a lot of players to come in and it is a very rare and good one at that too.
We have had occasions to host the governor of Delta State, Dr. Emmanuel Udughan on prospects of building four new refineries in Delta State with the assistance of Amakpe Refinery.
In doing that, we have had the opportunity of going right into the creeks where the militants are and even in the deep waters. In that way, we know what they want, what their needs are and how to bring development to them. I think all we need to do is give them some level of opportunities and openings, they need to have a sense of hope and belonging, that of equal participation and I think they are ready to give up arms.
The DPR is really anxious to see Amakpe Refinery up and running, this will form a peg for others to hang on really. We are all waiting anxiously to see the project come to fruition.
When do we expect the first litre of refined petroleum product to come out of Amakpe Refinery and when is the project due for full completion?
As we speak, we have completed 50 per cent of the mechanical aspect of this refinery, and like I told you earlier, it is not the old types of refineries you find in Warri, Port Harcourt or Kaduna. It is a modular refinery and it is very efficient, compact and easy to maintain. It is a very modern refinery which will be shipped down to Nigeria and installed at the site. We will continue to build more modular components and add up as we progress, that is the beauty of this type of arrangement. If a component has a problem, the other one will still be working, it is a very good system that we have put in place.
On when we are going into full production, I can tell you that we should be able to do that exactly 12 months from now or even less.
This project hopes to employ at least 250 Nigerians directly and another set of thousands indirectly, because you are going to have independent marketers that will be directly and indirectly hooked to this project. As a matter of fact, when we did the initial ground-breaking, we employed more than 500 people from the locality, even contractors trying to build estates.
What about arrangements on crude oil supplies to the refinery site, where are you getting this from?
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