By CLARA NWACHUKWU

Contrary to speculations, Vanguard can confirm that the Nigerian National Petroleum Corporation, NNPC, actually expressed the practicability and desirability of the setting up of six modular refineries proposed by the alliance of Petroleum Refining & Strategic Reserve, PRSR Ltd, and Vulcan Capital Corporation, VCC Ltd.

NNPC’s comments were expressed in a letter dated June 11, 2012, which was addressed to the Minister of Trade and Investment following a “request for the corporation’s comments on the feasibility of the venture and a confirmation for the guarantee of crude oil supply to the proposed refineries.”

The letter exclusively obtained by Vanguard with the reference: BD/GMD/06.12 was signed by one Aminu Baba-Kusa, on behalf of the former Group Managing Director, NNPC, Mr. Austin Oniwon, was in response to an earlier letter sent by the ministry to the NNPC boss.

Ministry’s introduction

The ministry in its own letter dated April 12, 2012 with the reference: PSTI/GEN/2012/294/Vol 1, was an introduction of Vulcan Petroleum Resources to the NNPC.

Titled, “Letter of Introduction,” the ministry informed the NNPC of Vulcan’s request for “an MoU on the possibility of investment in in the oil and gas industry in Nigeria, through the establishment of six modular refineries in partnership with Petroleum Refining and Strategic Reserve (Nig.) Ltd., an indigenous company based in Abuja.”

The letter, which described Vulcan as reputable international company with expertise in the oil and gas industry,” spoke about the minister of Trade and investment meeting with the leadership of both companies “led by Chief Edozie Njoku, Chairman, PPRSR, and Mr. Jim Manfield, Vice President Vulcan Africa.”

The Ministry’s letter also affirmed that “the desire of both companies is consistent with the country’s quest for the promotion of foreign direct investment.” It added that “other direct benefits of the venture would be job creation, skills acquisition/technology transfer and wealth creation.”

It also noted that the establishment of six modular refineries will “help reduce to a considerable extent, Nigeria’s dependence on the importation of PMS.”

The letter concluded by pointing out that discussions could not progress any further until “both companies submit themselves to your corporation for proper assessment and for briefing on the statutory requirements for entry/investment in the oil and gas sector of the economy.”

NNPC’s confirmation

In view of the foregoing, the NNPC in its letter titled, “Establishment of six Modular Refineries: Meeting with Petroleum Refining & Strategic Reserve(PRSR) Ltd and Vulcan Capital Corporation(VCC) Ltd, confirmed two things based on its evaluation of the alliance proposal.

First, it said that the “establishment of modular refineries is practicable and is desirable to increase local refining capacity. The Corporation will be available to conduct detailed technical evaluation in conjunction with investor group subsequently.”

The Corporation also promised to “make utmost endeavor to ensure crude oil supply to the planned six modular refineries.” It, however added a caveat the crude supply will be “subject to availability and location of the refineries.”

Discordant tunes

Developments since the exchange of the correspondences between the NNPC on the one hand, and the Ministry and the investors on the other had taken a twist, thus springing up series of issues.

Analysts believe that this might not be unconnected with which organ of government- NNPC or the Ministry of Trade and Investment will take custody of the project valued at over $4.5billion.

Others argued that the project might be stalled by “some interest groups who are benefitting from the subsidy regime through petroleum imports.”

However a top management of the NNPC who spoke with Vanguard in confidence said the issue with the modular refineries is not about the corporation not being in the know of the project, but about the promoters not sorting out issues with it first.

“There are outstanding issues of the supply of crude to the refineries, where will they be located, will they transport the crude through existing pipelines or they intend to build their own, will NNPC take equity in the project and several others. Rather than sorting out these details with us (NNPC) first, they went ahead to sign MoU with Ministry of Trade and Investment and we had to distance ourselves from it.”

But sources at the ministry maintained that there were apparently some communication gaps because “the MoU Vulcan signed with us was just a proposal of what they planned to do for which we will hold them accountable for since we were the ones that is introducing them.

“Also, there is no way they would have proceeded without the NNPC, which in fact, gave us the go ahead to sign the MoU. It is not as if the Ministry has been given the money for the project, we are just like a middleman. So it is unfair for the corporation to deny knowledge of the project if media reports are to be believed.”

The project

It would recalled that at the agreement signing last month, the Minister of Trade and Investment, Mr. Olusegun Aganga, said the six refineries with a combined capacity of 180,000 barrels per day would be built in collaboration with the NNPC.

“This is a historic moment and a big step for us as a country. Apart from power, one of the critical areas, which President Goodluck Jonathan has made a priority, is to have functional refineries. My understanding is that by the time the whole project is completed, the cost is estimated at about $4.5bn.

“This is the beginning of changing our old paradigm from exporting just raw materials and exporting jobs to the Western countries. There is no nation that has moved from being a poor nation to a rich one by exporting raw materials without having a vibrant industrial base. That is what we have to change for us to be a rich nation, and that is what the National Industrial Revolution Plan is based on,” Aganga was quoted to have said at the agreement signing.

The minister, who signed on behalf of the Federal Government, explained that two of the refineries will be completed within the next 12 months, while the others will be completed within the short to medium-term.

He added that the refineries would be located in areas where there are crude oil pipelines, and that when completed each of the modular plants will refine up to 30,000bpd and produce up to five million litres of petrol. diesel and kerosene.

The Vice-President/Director, VPC, Mr. Jim Mansfield, and Chairman, PRSR, Mr. Edozie Njoku, signed on behalf of their respective companies.