By Udeme Akpan

THE Nigerian National Petroleum Corporation, NNPC, has commenced moves to attract 20 companies to make substantial investment worth $20 billion in order to meet the Federal Government’s target of increasing refining capacity in the country.

Investigations showed that the apex oil corporation has, in the past few weeks, been engaging with the investors in order to inform, educate as well as assist them to prepare various packages required in the process of applying for licenses.

On completion of the engagement, the promoters of the modular refineries would be equipped with vital knowledge to submit their applications to the Department of Petroleum Resources, DPR, that is vested with the responsibility to issue such licenses.

NNPC

Confirming the development on the sidelines of a forum on modular refinery in Lagos, the General Manager, Refining Directorate, Mr. Ahmed Danladi, who is involved in the process, disclosed that the NNPC decided to play the role in order to guide potential investors to invest in the sector.

He said that the playing of this role became very important, especially as many potential investors did not know much about the sector.

In a follow-up telephone interview, Danlade added that: “Building a modular refinery is not cheap. It cost at least.”

It cost millions of dollars to establish a modular refinery with 10,000 barrels per day, bpd.

“But building a 100,000 bpd to 150, 000 bpd modular refinery can cost between $1 billion to $2 billion. So, investors need to have adequate funds to go into business,” he added.

The Associate Director, PricewaterhouseCoopers Limited, Mr. Olumide Adeosun indicated in an interview that there was a great need for investors to invest in refining, targeted at reducing dependence on importation.

“Current demand for refined products in the region is estimated at 39 billion litres and refineries such as SIR (Ivory Coast), SOGARA (Gabon) and SAR (Senegal) cannot meet this. There is an opportunity for potential uptake by neighbouring countries if the market has Nigeria’s refined products readily available.”

“Imports currently account for 90per cent of Premium Motor Spirit (PMS) supply and 60per cent of Automotive Gas Oil (AGO) supply. Nigeria consumes over 17 billion litres of PMS annually and consumes over 3 billion litres of AGO. Transportation and power are the major drivers of demand for PMS in the country while increasing the demand for self-generation options such as AGO powered generators is the major driver of AGO demand,” he added.

The Managing Director of Niger Delta Petroleum Plc, Dr. Layi Fatona, urged local and foreign investors to invest in the sector, adding that modular refinery was profitable.

Based on his experience in operating the Ogbele-based plant in Delta State, Fatona said investment could be recouped within the first few years.

Fatona said:  “The company is planning, as part of a two – five year plan to expand capacity fivefold to 5,000bpd which, if we assumed a 60% operational efficiency rate, equates to revenues greater than US$3m per month, or US$36m per annum. This would require capex of US12m to achieve, with a payback of around 6 months.”