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…We can’t raise $100m to build modular refinery – Niger Delta Illegal Refiners

By Emma Amaize, Regional Editor, South-South

THE  disclosure by Vice President Yemi Osinbajo, on March 24, that the Federal Government would build modular refineries in oil producing areas as part of measures to address the development challenges arising from years of neglect came as a shot in the arm with Niger Deltans, including the illegal oil refinery operators themselves, embracing the idea.

Osinbajo, who spoke at a town hall meeting in Umuahia, Abia State, also promised that thermal power stations would be sited in the oil communities, adding that arrangement was being concluded with the National Sovereign Wealth Fund, NSWF, and industry experts on the take-off of modular refineries.

Since then, there has been no clear-cut course of action from the federal government on how the modular refineries will be established, but the Minister of State for Petroleum, Dr. Ibe Kachikwu, indicated, recently, at the 10th  edition of the annual Nigerian Association of Energy Economics, NAEE/ International Association of Energy Economics, IAEE, conference in Abuja, that government had  held meetings to review and adopt implementation template for setting up of modular refineries to replace the illegal refineries. 

After the VP’s  pronouncement, some entrepreneurs, including a leading America modular refinery investor, Misssouri American Energy, Moham, and a U.S –based businessman, Mr Charles Ihaza, have declared their intentions to set up modular refineries at Gbaramatu, in Warri South-West local government area of Delta State and Eghudu in  Ovia North East local government area of Edo State.

The Federal Government had granted licenses to some investors in the past to establish modular refineries, but none was established despite the promises and assurances.


However, there is a growing and more fundamental concern among the illegal refinery operators, who the concept is supposed to profit. Early last month, the operators and other stakeholders converged on Warri to discuss how best to key into the Federal Government plan, designed to discourage oil theft in the region.

The meeting was convened by HRM King Para Ekiyes, Pere Egbetue of Esuku, Tuomo Kingdom in Burutu local government area of Delta State in conjunction with the Bayelsa Business Roundtable.

Expensive venture

The operators became worried after Fyne-Face Dumnamene, Research and Project Officer on Energy of the Social Action, a rights group, explained that “a conventional modular refinery costs over $100 m to build and $50,000 to secure license.”

Cassidy Mbeera, coordinator of illegal refinery ex-artisan group, said after  Dumnamene’s presentation, “We are not going stop illegal refineries. The Federal Government must first come up with what they are putting on the table for us on this modular refinery before asking us to quit the business that sustains our families.

“You can see that all of us put together do not have the financial muscle to own a modular refinery. We will not go cap in hand begging government. Government should set up modular refineries for us. If they allow politicians and moneybags to hijack the benefits it meant for us, we will all continue to have problems.”

At the end of the Warri meeting, the stakeholders called on the Federal Government to take feasible steps to ease their capacity to key into the dream of modular refinery.

Unclear modalities

At a similar meeting under the auspices of Modular Refinery Business Stakeholders Forum held in Ughelli, also in Delta State, the stakeholders expressed fear over they described as the  undue silence of the Federal Government on the  operational modalities involved in the establishment of modular refineries.

Chairman of the forum,  HRH King Ekiyes, stated  that the excitement that followed the pronouncement by Osinbajo had become short lived as the Federal Government had not come up with operational guidelines, procedure of obtaining licenses and possible grants to establish the mini- modular refineries.

Ekiyes,,however, noted that the proposed community- based mini-modular refineries will reduce environmental pollution as the refining process will be properly regulated by relevant authorities.

“We believe that the establishment of community-based modular refineries will create employment opportunities for the teeming unemployed youth in the region. I want to call on all stakeholders in the artisanal refining business to close ranks by coming together to forge a common front to engage with the authorities on how to benefit from this new business opportunity in the region. It is my wish that stakeholders from across the region will come together to form a coalition to engage meaningfully with the authorities,” he said.

Give license to impacted communities – Ozobo

National President of the Ijaw People Development Initiative, IPDI, Mr. Austin Ozobo, one of the foremost agitators for the legalization of illegal refineries in the region, told Sunday Vanguard: “We want the licenses of local refineries to be given to host and impacted Niger Delta communities. And they should be allowed to source for private investors to come and build local refineries.

“We do not want the idea of government imposing investors on the communities; the present arrangement will only end up turning local refinery operators to helpers. And that may create an avenue for more aggression, so we are not comfortable with what government is doing at the moment.

“Another thing is that the local refinery operators may likely be shortchanged in the present arrangement. They should be allowed to form clusters and such clusters should be given licenses to either build or source for investors to build such refineries.

“I am the initiator and the first to agitate for licensing of local refinery operators. This is not what I agitated for; I want all-inclusive system where nobody will be sidelined and a system that will not be hijacked by the rich. If government lacks idea about it, let them contact people that here the idea.”

Ozobo cautioned: “It will be dangerous to shortchange the original operators. If government makes such mistake, I can tell you that local refining may likely continue. So, government must do the needful.

“Since a process is on, the military, especially the navy, should stop further destruction of local refinery facilities because such actions make mockery of the    government policy on local refinery.”

How oil communities can establish modular refinery- Okirika

A former Chairman of the Delta State Oil Producing Areas Development Commission, DESOPADEC, Chief Wellington Okirika, who saw the vision of modular refinery but could not implement it during his tenure because of administrative bottlenecks at the time, acknowledged that the project was capital intensive.

Okirika, the Bolowei (traditional prime minister) of Gbaramatu Kingdom and leader of Gbaramatu Oil and Gas Producing Communities Trust Fund, actually led investors from Misssouri American Energy, Moham, to the Vice President and other Federal Government officials when they visited Nigeria  on the Gbaramatu modular refinery project, early last month.

Speaking on the modular refinery concept, he gave an insight into how funds for the project could be raised by the oil communities. His words: “Since the Federal Government template on the community-based modular refinery will involve producing communities in a 60/40 agreement with the investors,    the oil producing communities are to source fund for their 40 per cent    contribution. It is only logical and wise that the 13 per cent    derivation fund,    which is for the producing communities primarily,    as a compensation for lost fishing rights and productive farm land, that the President should direct the governors of the oil producing states,    who are receiving the derivation fund on monthly basis to provide between 30 per cent    and 50 per cent   of   the allocation to enable the producing communities fund their 40 per cent contribution in their states.”

Okirika went on: “As Executive Chairman of DESOPADEC, one of my top most decisions then was to industrialize the degraded Delta environment with modular refineries, but the government then did not have the political will to carry out such industrialization policy.

“Eight years after that well thought  out policy, the current government is demonstrating the political will to ensure that the degraded Niger Delta environment  is industrialized and I am confident that the community-based modular refinery is doable and achievable.

“Currently, the Gbaramatu Oil and Gas Producing Communities Trust Fund has entered into a partnership agreement of 60/40 with an American based modular investor,    Missouri American Energy to develop modular refinery in the Gbaramatu area.

“The world has moved beyond traditional refineries and everybody is now on modular refinery technology, which is cheaper, easier to manage and more environmental friendly and, therefore, Nigeria cannot remain behind.

“Modular refinery will create jobs and wealth in the oil and gas producing communities,   guarantee security of oil and gas facilities in the producing states,    increase crude oil production which will, in turn, increase oil revenue,    provide quick solution to importation of refined petroleum products into Nigeria, is the only option for permanent removal of fuel subsidy, will fast track deregulation of the downstream sector of the petroleum industry and stop illegal refinery and crude oil theft.”

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