Abuja—Minister of State for Petroleum Resources, Timipre Sylva, is pushing for an intervention fund from the Central Bank of Nigeria (CBN) to support modular refineries.
The minister said the Federal Government was addressing the challenge of access to crude oil being faced by the modular refineries.
The Nation newspaper reports that Sylva also informed that the government took 30 per cent equity stake in each of the 5000bpd WalterSmith modular refinery in Ibigwe, Imo State and the 10,000bpd Duport Modular Refinery in Edo State, among others.
According to him, the completed modular refineries were contending with (feedstock) domestic supply obligation challenges, seeking crude supply from the Nigerian National Petroleum Company Limited (NNPCL) 60% equity.
He said: “Key issues are crude supply obligation for completed refineries. Support is required in the area of crude supply from NNPC 60% equity.”
Sylva, who spoke during the President Muhammadu Buhari administration scorecard (2015 – 2023) presentation in Abuja, noted that the rehabilitation of 60,000 barrels per day Port Harcourt Refinery Company (PHRC) has been completed and set to begin production by the first quarter of this year.
“What he (Mele Kyari) is saying is that the rehabilitation of the 60,000 barrels per day is being completed and it is going to be started in first quarter,” he said.
Sylva’s confirmation came on the heels of the Nigerian National Petroleum Company Limited (NNPCL) Group Chief Executive Officer, Mallam Mele Kyari’s explanation that it was not practical to start the production in the last quarter of last year as promised.
Kyari noted that rehabilitation of the refineries took 42 months from the date of signing its contract.
He said: “The rehabilitation of the refinery will take 42 months from the date of the award of the contract. And typical of every refinery, we do their rehabilitation in phases and by our plan, we promise to start off the polyplastic 60,000 barrels per day complete the activity by the last quarter of 2022.
“But it is not practical. But we will start it up in the first quarter of 2023. Otherwise every other process is going on.”
According to the minister, the Dangote Refinery in which the NNPCL holds 20 per cent shares, Waltersmith 30 per cent shares, Azikeil 30 per cent and Duport 30 per cent will come on stream this year.
He said: “We have also taken 20% equity in Azikeil refinery and Waltersmith 30% and Dupur refinery. Dupur is already finished. We have concluded the construction. It is only remaining to start operation. I am sure within the next one month or so, Dupur refinery should start operation.”
The minister also revealed that Dangote Refinery has already concluded its sourcing of feedstock (crude oil) with NNPCL but the modular refineries were still negotiating their contracts for the stock in the bid to begin refining.
He said: “Of course in the case of the NNPC with the big refinery like Dangote, there is already a contract between NNPC and Dangote Refinery and of course we will not have that problem.”
“You know these are contractual issues. You have a refinery, you need to have feedstock guarantee because the refinery is to refine crude oil.
“So, if you own a refinery and you don’t have the crude then you need a contract with somebody who has the crude who will be supplying you the crude to refine. But at that point sometime the owner of the asset may not be producing at the time it is also undergoing some problems and challenges.”
On petrol subsidy, the minister noted that the policy was no longer sustainable.
On whether the subsidy funds would have been enough to build new refineries, he said perhaps the government could channel the funds into infrastructure development, including new refinery when the subsidy support is removed.
He insisted that the desirable thing to do was to remove the petrol subsidy in order to attract private investors.
According to him, the petrol market is driven by forces of demand and supply; private investors will be attracted into the refinery business.
The minister said: “Let us remove the subsidy so that the government will have more money to deploy to the development of things that will be useful to all of us as a country including the development of other refineries, if that is the priority of the government.
“Also you find out that a lot of private sector people if you take out the subsidy will be willing to develop their refineries because they know that refinery is viable.”
President Muhammadu Buhari, he said, also asked him to complete the gas flare commercialisation programme and to reduce the cost of crude oil extraction by at least five per cent.
He said the sector ministry, under his watch, has attained 8.6 per cent change in domestic LPG demand and 1,064,660MT domestic LPG consumption.