11 November 2012

Nigeria: No Progress on U.S.$28.5 Billion Subsidy Relief Refineries

When President Goodluck Jonathan, in the heat of the anti-fuel price hike protest in January, announced the federal government's plans to set up three greenfield refineries in Lagos, Kogi and Bayelsa states, there were high expectations that the perennial fuel crisis would end.

Eleven months have passed, but the government is yet to kick off the projects.

When LEADERSHIP SUNDAY visited the proposed sites of the refineries, there was no single signpost to indicate that such projects were slated for the areas.

The refineries, estimated to cost $28.5 billion, were among the palliatives announced by the president under the Subsidy Reinvestment and Empowerment Programme (SURE-P) to address the problems in the downstream sector of the oil industry.

When contacted on the state of the planned refineries, the Nigerian National Petroleum Corporation (NNPC) said they would take off as soon as the federal government gives approval.

Acting spokesman of the corporation Mr. Fidel Pepple told LEADERSHIP SUNDAY that the feasibility studies on the refineries had been concluded,adding that "what is left is for government to give approval for the project to go ahead.

"The update on the greenfield refinery is that the feasibility studies have been completed. For now we are waiting for the government to give the directive for the project to go ahead; then we will proceed," Pepple said.

On whether the investors, who are to be part owners of the plants, were still willing to continue with the projects, considering the insecurity in the country and the non-passage of the Petroleum Industry Bill (PIB), Pepple said, "They are very ready and willing; we have no problem with that."

The refineries were scheduled to come on stream in 2017, but there was no activity in the site earmarked for the project in Oloibiri area of Ogbia local government area in Bayelsa State.

The natives of the area, where oil was first discovered in commercial quantity in Nigeria, claimed ignorance of the project. The people said they only read about it on the pages of newspapers.

Prior to Jonathan's announcement, the NNPC and China State Construction Engineering Corporation (CSCEC) Limited had, in 2010, signed a memorandum of understanding (MoU) for the joint sourcing of funds for the construction of refineries and a petrochemical plant in Nigeria under a $28.5 billion provisional deal.

The projects were envisaged to increase Nigeria's refining capacity to over one million barrels per day (bpd) from the current 445,000 bpd capacity and stem the flood of importation of refined products into the country.

Front end engineering and design (FEED), site preparation and infrastructure were planned to start in February 2012 and followed by construction works in July of the same year.

Under the deal, Industrial and Commercial Bank of China (ICBC) was to provide 80 per cent of the $11.3 billion estimated for the project in Bayelsa State, while the NNPC would provide 20 per cent of the equity, which would be diluted for private-sector participation later.

LEADERSHIPSUNDAY check on the website of the construction firm showed that the NNPC was still planning to put together a consortium for the purpose of raising the funds.

No official of the state government was ready to comment on the issue.

In Kogi State, nothing is happening at the proposed site of one of the refineries approved for the state.

LEADERSHIP SUNDAY gathered that aside the hiccups stalling work on the project at the national level, the location of the refinery had been the major problem.

The former governor of the state, Alhaji Ibrahim Idris, approved a land for the project in Itobe in Ofu local government area of the state.

But some prominent indigenes from the central axis of the state were said to have expressed shock over the move and insisted that Alhaji Idris was simply playing politics with the matter.

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