Abuja — Anyone wishing to establish a private petroleum refinery in Nigeria will have to cough up at least $150,000 and undergo a three-stage process of approval, according to a statement issued in Abuja on Friday by a presidential aide.
The Presidential Adviser on Petroleum and Energy, Rilwanu Lukman, announced that would-be investors in refineries would have to win three successive approvals - a 'Preliminary License to Establish a Refinery', 'Approval to Construct', and 'License to Operate the Plant'.
For the 'Preliminary Licence', he said, applicants would have to pay a non-refundable fee of $50,000. Those who submit a "Basic Design Package" would be given 'Approval to Construct'.
The final stage involving the grant of an operating licence will require a fee of $100,000, Lukman said.
Nigeria's four existing refineries are full subsidiaries of the state-run Nigerian National Petroleum Corporation (NNPC). Their dismal performance fuelled demands for an end to state monopoly on the supply of refined petroleum products.
The private investment exercise is expected to start in the third quarter of this year when, Lukman promises, the government will publish details of the new guidelines, and invite prospective investors to submit their applications.
Lukman said the objective of the new procedure was to provide, "a basis for identifying and selecting applicants with bankable projects to be issued [with a] Preliminary Licence to Establish a Refinery."
The military government of late General Sani Abacha had previously announced a two-stage approval process for the establishment of refineries. The stages proposed were, 'Granting Licence to Construct a Refinery' and a 'Licence to Operate a Refinery'.
But Lukman said the new guidelines are designed to streamline the allocation process, "and to establish a transparent process for selection of deserving applicants."
He said that investors who applied under the previous guidelines - they paid $50,000 for the 'Licence to Construct' - "may wish to update their applications to conform with the new guidelines."
Applications that are acceptable, from the government's point of view, will be those that have met the requirements of the new guidelines, "and can confirm general feasibility of the proposed project."
Applicants for a 'Preliminary Licence' will be required to provide a Preliminary Feasibility Study that will contain various information, including the type of refinery, refining capacity range, and a preliminary marketing plan.
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The feasibility study is also expected to show the preliminary product slate, preliminary crude oil or feedstock slate, a list of proposed sites, and proposed crude oil or feedstock supply.
It should also indicate the product evacuation scheme, proposed safety provisions, a preliminary environmental impact statement, and preliminary financial plan.
The government argues that the establishment of private refineries will end the perennial petroleum products scarcity which disrupts life for Nigerians throughout the country.
Nigeria currently depends on imported refined products to meet domestic need. A subsidiary of the NNPC responsible for the marketing of refined products revealed early this week that Nigeria has spent about $5bn on the importation of these products over five years, with half of that amount being spent in the past year alone.
