The proposed 300,000 barrel per day Greenfield Lekki Refinery located in Lagos may remain in the realm of wishful thinking of the Lagos State government and the stakeholders if the alleged flaws in the new Petroleum Industry Bill (PIB) are not immediately addressed.
Some of the investors told LEADERSHIP Sunday in Lagos that they backed out of the project because of some of the contentious clauses in the PIB before the National Assembly. "The International Oil Companies (IOCs) driving the Lekki Refinery are reluctant to risk their money in the project because of some provisions in the PIB. The bill is not in our interest.
We want the status quo to be maintained as in pre-PIB Joint Venture Agreement with the Nigerian National Petroleum Corporation (NNPC) and the Lagos State government," said one of them. "Right now, I must tell you that investors are worried that the passing of the PIB in its present form will automatically reverse the earlier agreements.
The provisions of the PIB cede too much power to the government at the expense of the investors. There is also this feeling among the investors that when the PIB is eventually passed the host communities' equity participation in the upstream oil and gas industry will be increased. The 8 per cent the IOCs think is right going but the PIB will increase it to 10 per cent."
He added that these facts, coupled with frequent changes in the top management of the NNPC by the federal government, had made sourcing of funds for the $8 billion project difficult.
LEADERSHIP Sunday's visit to the Lekki Free Trade Zone (LFTZ), the proposed site of the refinery, showed that the envisaged 2017 streaming date might not be realised as nothing was on the ground to demonstrate the seriousness of the investors to deliver the project.
It was observed that, since the signing of the agreement between the Lagos State government and the NNPC in collaboration with a consortium of Chinese investors known as ChinaState last year for the establishment of the refinery under a public-private partnership (PPP) arrangement, nothing tangible had been done.
If the stakeholders had gone ahead with the construction of the refinery as planned, it would have, in addition to the above crude output, produced 500,000 metric tonnes of liquefied petroleum gas (LPG) per annum.
Under the arrangement, the Chinese are expected to provide 80 per cent of the funds, leaving 20 per cent to the NNPC. The Lagos State government will, in addition to providing the land for the project, construct infrastructure such as road to the site and electricity.
Optimistic that the partnership would work, Governor Babatunde Fashola, who recently received a delegation of the investors led by the group executive director, engineering and technology of the NNPC, Billy Agha, said the state was set for the multi-billion-naira refinery
The governor said the project was coming at the most opportune time, adding that the government did not foresee any hurdle in the project with the involvement of the Chinese investors because the state was already partnering with another group of Chinese investors on the development of the first phase of the LFTZ.
The NNPC management hopes that the Lekki refinery, when completed, will provide over 7,000 jobs for both skilled and unskilled labour.