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How Fuel Subsidy, Others Stalled Modular Refineries’ Take-Off




In this report, OKECHUKWU NNODIM writes on how the prolonged subsidy on Premium Motor Spirit and other factors stalled the take-off of modular refineries in Nigeria

Nigeria’s dependence on petroleum products imports would have reduced considerably if all the licensed operators of modular refineries had developed the facilities.

Modular refineries are simplified refineries that require significantly less capital investment than traditional full-scale refineries.

The initial process, or Crude Distillation Unit, allows for simple distillation of crude oil into low-octane naphtha, diesel, kerosene and residual fuel oil.

In Nigeria, modular refineries are crude oil processing facilities with capacities of up to 30,000 barrels per day and are being built as part of plans to curb oil theft and promote peace in the oil-producing region of Niger Delta.

In May 2018, the defunct Department of Petroleum Resources said it granted licenses for the establishment of modular refineries to 25 investors.

It had explained in a statement that “There are three stages to acquire a license for operation. These are: License to establish, Approval to construct and License to operate.

“In 2002, from a total of 105 applications treated, 21 companies were granted Licence to Establish petroleum refineries. The LTE had a validity of 18 months. In 2004, in line with the refinery guidelines, an evaluation of the extent of engineering design work was done.

“17 companies of those previously granted LTE were granted Approval to Construct refineries, with a validity of 24 months.”

The department further stated, “Currently there are 25 licensed companies, with three billed to construct conventional stick-build plants and the remaining 22 as modular units.”

However, since 2018 when the defunct department announced that it had issued 25 licenses for modular refineries, only about four have been successfully completed and they include OPAC Refinery, Duport Edo Refinery, Walter Smith Refinery, and Niger Delta Refinery.

“Many of the refineries could not take off because of the unfavourable economic conditions. For instance, the prices of products were regulated (due to subsidy) and capped,” the Deputy Chairman of the Crude Oil Refinery Owners Association of Nigeria, Mrs Dolapo Kotun, told our correspondent.

She stated this in response to what had happened to the modular refinery licenses issued by the defunct DPR over the years. CORAN is a registered association of modular and conventional refinery companies in Nigeria.

Kotun, who is the Executive Director, Operations, Ikwe-Onna Refinery Ltd, and Chairperson, Downstream, Women in Energy, Oil and Gas, said, “Also, investments being made are in foreign currencies, but products are sold in naira.

“So, many licence holders could not secure funding within the two-year license time frame given. Due to this, some of the licenses need to be re-validated, unfortunately at the same cost paid for the original  approval.”

Operators explained that though subsidy on petroleum products, PMS especially, was stopped by President Bola Tinubu towards the end of May this year, the prolonged period of its existence adversely impacted on the take-off of modular refineries.

In April 2023, the Nigeria Extractive Industries Transparency Initiative revealed that the amount spent on subsidising PMS between 2005 and 2021 was N13tn.

The agency’s Executive Secretary, Ogbonnaya Orji, said, “NEITI’s latest policy brief titled ‘The cost of fuel subsidy: A case for policy review,’ revealed that Nigeria expended over N13tn ($74bn) on fuel subsidies between 2005 and 2021.

“The figure in relative terms is equivalent to Nigeria’s entire budget for health, education, agriculture, and defence in the last five years, and almost the capital expenditure for 10 years between 2011 and 2020. It is also important to note other economic opportunity costs of fuel subsidy, which include slashing allocations for the health, education, and technology infrastructure sectors.

“Others include the deterioration of the downstream sector with the declining performance of Nigeria’s refineries and recording zero production in 2020; disincentivised private sector investment in the down and mid-stream petroleum sector; low employment generation since the refining process is done outside the shores of Nigeria; worsening national debt; declining balance of payment, forex pressures and depreciation of the naira and of course product losses, inefficient supply arrangements, scarcity and its attendant queues, etc.”

CORAN pointed out that though the government had its genuine reasons for subsidising fuel, the initiative actually stalled the coming stream of modular refineries.

It, however, stated that with the current implementation of a fully deregulated downstream oil sector, many investors in the modular refinery space were heading back to invest.

“However, with the deregulation and subsequent fuel subsidy removal and ongoing discussions with the MPR (Ministry of Petroleum Resources), NMDPRA (Nigerian Midstream and Downstream Petroleum Regulatory Authority) and NUPRC (Nigerian Upstream Petroleum Regulatory Commission), more of the licensees are going back to kick-start their projects.

“There are currently about four in production with many more in different stages of development,” the CORAN deputy chairman stated.

Also commenting on the development, the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, told our correspondent that the emergence of functional modular refineries was long overdue.

“What is stopping the government from giving modular refineries’ operators the required support to reduce our continued dependence on imported petroleum products?

“The emergence of functional modular refineries in their numbers in Nigeria is long overdue. We cannot continue to import products when we can build modular refineries that can help us refine some of our crude oil. Now subsidy is gone, let the modular refineries work.

“We know that subsidy also contributed to their inability to come on stream as required. Now that it is gone, we expect the government to also give them the required support so that many of them can start development and refine crude in the nearest future,” Ukadike stated.

Modular refineries will complement Dangote

On whether modular refineries would still be viable in the face of the Dangote Refinery which is estimated to produce 650,000 barrels of crude daily, CORAN replied in the affirmative.

“Modular refineries are very viable and essential in securing Nigeria’s energy needs now and in the future. They are localised in multiple sites in the Niger Delta area, and not just one location as is the case with the Dangote Refinery.

“Hence, these modular refineries will be able to immediately provide world-grade quality refined petroleum products to the local markets around their different refinery sites.

“Dangote’s capacity alone cannot meet Nigeria’s present refined products’ needs and we are not even sure when it will start producing even though it was ‘commissioned’,” Kotun stated.

She noted that even if the country was producing excess capacity, “Who says we cannot export the excess?

“The goal of domestically refining our crude oil is not to just meet demand, but to eventually surpass present demand so that the surplus will make products affordable and Nigeria can also become an export hub for these products.”

CORAN’s position was corroborated by the President of Petroleum Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, who stated that modular refineries could function alongside other full-scale refineries.

However, Nigeria’s full-scale refineries in Port Harcourt, Warri and Kaduna have been dormant for ages, though the government had severally promised that the facilities would come on stream soon.

“Once we have modular refineries running alongside full-scale refineries, Nigeria will become a petroleum products’ exporter and that is what many of us are advocating for,” Gillis-Harry stated.

Other challenges

On whether holders of refineries’ licenses were facing difficulties that would require government intervention, the CORAN deputy chairman stated the concerns were enormous.

“The challenges being faced include lack of access to intervention funds for modular refineries. Financiers want off-take, and more importantly, guaranteed feedstock which was not provided by NNPCL (Nigerian National Petroleum Company Limited).

“In a bid to address these issues, the former Minister of State for Petroleum Resources set up two committees: One: For the Establishment of Modular Refining Intervention Fund. Two: Technical Committee to make Nigeria an export hub for refined products.

“The two committees, where CORAN played a vital role, developed a white paper, which was not yet implemented before the last administration left.”

Kotun further outlined the other challenges confronting modular refineries, as well as the areas to be addressed.

She said, “Funding is a challenge. The CBN should be mandated to create an intervention fund where genuine modular refineries can source funding to support this critical project. There should be a guarantee of feedstock and supply in accordance with the provisions of the Petroleum Industry Act.

“Currency of feedstock payment should be looked into. Since products are to be sold in naira, the crude supply feedstock should be sold to our members in the same currency. There should be waivers for pioneer greenfield project developers.

“Loading and other fees to be paid upon commissioning of these modular refineries should be waived for some years to encourage more investment. Also, we need security of assets from vandalism and destruction.”

On what should be done to promote the outputs of modular refineries, particularly since the full deregulation of the downstream sector had been implemented, CORAN said loans at single-digit interest rates would be welcomed.

It said the government should “ensure that ATC license holders have access to single-digit intervention funding of up to 20 per cent of total project cost”.

“Ensure they fulfill their domestic feedstock obligations first, before exporting crude oil abroad. Waivers should have an implementation framework so that license holders can have an agreed process to tap into them.

“Waive the re-validation of license fees. We all have already spent and continue to spend our company and investors’ funds to get the licenses in the first place and work towards financial closing and our project implementations.

“Revisit and review fees being charged to already commissioned modular refineries. The government should as a matter of urgency, implement the white paper from the former petroleum minister’s steering committee,” the CORAN boss added.

The body further noted that the government should “ensure that all the waivers, benefits, support given to the Dangote Refinery are also extended to all refining license holders”.

They argued that if modular refineries were properly supported, the country’s perennial fuel scarcity would be a thing of the past.

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China Reaffirms Commitment To Nigeria, Renovates Ogun School



The Chinese Consul-General, Lagos, Yan Yuqing, has reiterated the commitment of the People’s Republic of China towards assisting Nigerian government to develop its education sector.

The Chinese Consul-General disclosed this during the commissioning of renovated China-Nigeria Friendship Model Primary School, Igbesa in Ado-Odo/Ota Local Government Area of Ogun State.

Yuqing said China is quite convinced that education is the foundation of national development and a weapon to fight poverty.

He said China is always willing to partner with her host country to make meaningful investment in the critical sector

The projects sponsored by the Chinese Consulate and Ogun-Guangdong Free Trade Zone included a block of classrooms, cafeteria, as well as donation of educational materials to the pupils of the school.

Yuqing said, “Chinese admire that education is the foundation of national development in the long run and strong weapon to fight poverty. All modern countries in the world do not fail to attach importance to education. As the largest developing country in the world, China has made remarkable achievements in all aspects of social development.

“These achievements are inseparable from our unswerving implementation of the strategy of invigorating China through science and education. And we always place education in a strategic position of priority development. We will continue to support Nigeria’s education system in all areas”.

She added, “Eleven years ago, the construction of this school began. Since then, this school has become a bridge of friendship and understanding between Nigeria and China and it has witnessed sincere friendship from China.

“Today, you can see here, the classrooms are more spacious, the campus is more beautiful, and the facilities are more complete. I hope that all the children will study harder in these improved classrooms and strive towards achieving their goals as soon as possible”.

While advising the pupils, the Consul-General said, “Children education is related to the future of a country; now you are the future of Nigeria. Work hard and fight for a better tomorrow for the prosperity of Nigeria.”

The Deputy-General, China-Africa Investment, Kevin Liu, said the China-Nigeria Model School stands for knowledge, cultural exchange, and mutual understanding, saying, “These values promote global peace and cooperation and we are committed to maintaining this standard for generations to come”.

Governor Dapo Abiodun, who was represented by a Commissioner-designate,Mr. Sesan Fagbayi, disclosed that the project would no doubt further foster smooth bilateral relationship with the Chinese government.

Abiodun has however appealed to the residents of Igbesa to continue to cooperate with the Chinese investors for peace and friendly environment in order for their businesses to thrive.

The Oloja-Ekun of Igbesaland, Oba Oluwatoyin Akinde, represented by Otunba Ade Durojaiye, lauded the Chinese Consulate and Ogun-Guangdong Free Trade Zone for the project pleading for more support in developing the town.

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Fresh Strike Looms As NLC’s Ultimatum Expires Today



AS the ultimatum by the Nigeria Labour Congress, NLC, to the Federal Government to address the mass suffering and pains occasioned by the removal of subsidy on petrol expires today, the leadership of the Congress will meet next week to decide when to begin an indefinite nationwide strike.

But Vanguard gathered that the Vice President, Senator Kashim Shettima, has been meeting with some members of the government team on how to avert the strike.

It was also gathered that the Minister of Finance, Wale Edun, and the Minister of Labour and Employment, Simon Lalong, alongside the Vice President, are putting together a package, including wage awards, to be presented to the NLC leadership.

It will be recalled that NLC had between Tuesday, September 5 and Wednesday 6 embarked on a two-day nationwide warning strike to protest, among others, perceived government insensitivity to plights and sufferings of Nigerians, especially workers, following the subsidy removal.

Ahead of the warning strike, the National Executive Council, NEC, of NLC had issued within 14 working days or 21 days from September 1, 2023, an ultimatum for the government to address the excruciating mass suffering and the impoverishment experienced around the country, threatening an indefinite strike if government failed to address its demands.

As the 21-day ultimatum expires today, Vanguard learned that critical organs of NLC will be meeting next week to decide on the indefinite strike and modalities if nothing concrete was done to lessen the suffering and hardship of Nigerians.

A source said: “The issue is conventional, when an ultimatum expires, you call your organs and the organs will decide when to commence the strike. If we ever decide to say we would take one day or few days or one week to prepare for it, that would be their position.”

Pressed to be more categorical on whether the strike would commence immediately, one of the sources privy to the NLC meetings simply said “Nothing is impossible.”

‘Meeting to hold on a date for the strike to begin’

Another source told Vanguard that the “last NEC held on September 1, 2023, has actually given the leadership of NLC, especially members of the National Administrative Council, NAC, the go-ahead to meet, fix a date for the commencement of the indefinite strike and communicate to the state councils and industrial union affiliates.

“I can tell you that the leadership will meet next week and fix a date for the strike. However, if NAC members are convinced that the government has addressed our demands to an appreciable level, in such a case, the leadership will still call the organs to brief them of the development.”

‘Govt team working to avert strike’

The source, however, said available information revealed that the government team is working seriously to avert another round of industrial unrest by NLC.

He said further that both the minister of finance, and the vice president, who is standing in for the President who is attending the United Nations General Assembly, UNGA, Summit in New York were considering some figures.

“So they know the seriousness of the planned action and some of them are speaking out boldly that they are not afraid because of the package they have for workers.

“Available information is that the government will soon announce what it has. They are really making efforts and again the President is not in the country.

“What we don’t know is whether what they have will be enough for NLC to consider or not. In the past two to three days, the vice president has been meeting with some of the government team to come up with something. “

The source made it clear that the NLC leadership had said it would not be part of any meeting if there were no tangible packages for workers.

Attempt to get a reaction from the Presidency did not yield any results as the Special Adviser to the President on Media and Publicity, Chief Ajuri Ngelale, is out of the country.

The presidential spokesman is with the President in New York for the UNGA summit.

Recall that while briefing last Friday, after its NEC’s meeting, NLC President, Joe Ajaero, said: “NEC-in-session of NLC resolved to embark on a total and indefinite shutdown of the nation within 14 working days or 21 days from today until steps are taken by the government to address the excruciating mass suffering and the impoverishment experienced around the country.

“To commence a two-day warning strike on Tuesday and Wednesday, 5th and 6th September 2023 to demonstrate our readiness for the indefinite strike later in the month and to also demand that the state vacates the illegally occupied national headquarters of the National Union of Road Transport Workers. “

The NLC also resolved to embark on a mass protest and rally in Imo State within September, and equally raised the alarm over what it described as a renewed onslaught by the government and its agents on labour unions.

Ajaero explained that the proposed strike was necessitated by the government’s deliberate neglect and disregard to engage the relevant stakeholders through the channel of social dialogue.

He said the Federal Government had refused to engage and reach an agreement with organized labour on critical issues on the consequences of the unfortunate hike in prices of petrol which had unleashed massive suffering on Nigerian workers and masses.

Ajaero said: “There is a renewed onslaught against trade unions and its leadership by the state and its agents across Nigeria.

‘’The Police, under the instruction of certain forces peddling the name of the President of the Federal Republic of Nigeria, invaded and occupied illegally the national headquarters of the National Union of Road Transport Workers headquarters seeking to install its own executive.”


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Kogi Declares Free Education In Primary, Secondary Schools; Commences Distribution Of Palliative



The Kogi government on Thursday declared free education for indigenes at primary and secondary school levels.

Governor Yahaya Bello made the declaration in Lokoja when he inaugurated the distribution of the federal government’s palliatives to cushion the effects of subsidy removal.

“My administration has now declared free education from primary to secondary school in the state and will cover examination fees for WAEC, NECO, and JAMB for all indigenes of Kogi,” he declared.

Mr Bello, who commended the federal government’s efforts to mitigate the impact of fuel subsidy removal on citizens, said the palliatives, which were valued well in excess of N2 billion,  would reach intended beneficiaries regardless of political, religious, or ethnic affiliations.

He extended his gratitude to President Bola Tinubu for the idea.

“Already, all the local government areas of the state have commenced the distribution of rice and other essential items.

“Therefore, this launch is essentially an extension of our ongoing efforts to cushion the impact of the current policy on our citizens.

“We are not only distributing rice but also making cash available to reach the people. The total value of what we are launching for distribution today exceeds N2 billion, and it is intended to reach every household in Kogi,” he stated.

He emphasised that those responsible for the distribution must not discriminate, warning that any report of bias or favoritism, or hoarding would be dealt with accordingly.

The governor, who called on security agencies to ensure a peaceful and smooth distribution process, assured the people that more initiatives to alleviate hardship were in place.

He commended the state’s people for their support for Mr Tinubu’s administration and the New Direction administration in Kogi, which had prioritised the welfare of residents.

While mentioning the various infrastructure developments that had taken place across the state, Mr Bello expressed confidence that the governorship candidate of the APC, Usman Ododo, when elected as his successor, would continue to build on the current achievements. 


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