Why construction of seven refineries is delayed in Nigeria

• There person been important obstacles to investments successful the gathering and full-scale operations of 7 refineries crossed the country
• They warned that without 7 caller refineries, the nonsubjective of attracting investors and investments mightiness stay unachievable
• The NUPRC released manufacture information showing that 15 operators clasp licenses to make refineries with a full regular refining capableness of 1,151,500 barrels

Legit.ng writer Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Investments successful the operation and full-scale operations of 7 caller and existing refineries nationwide person been severely hampered by the ongoing deficiency of crude oil, section refiners.

Three facilities chosen by the NUPRC to person regular crude allocations are not operational, per the research. Photo Credit: FG
Source: UGC

They cautioned that the lofty extremity of luring investors and investments meant to summation section refining capableness and lessen reliance connected imports whitethorn stay unattainable successful the lack of a Seven caller refineries successful Nigeria and a accordant and dependable proviso of oil.

Eche Idoko, the National Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria, revealed the astir caller development.

The Nigerian Upstream Petroleum Regulatory Commission provided manufacture information showing that 15 operators person licenses to physique refineries with a full regular refining capableness of 1,151,500 barrels.

However, conscionable 852,000 bpd, oregon a tiny information of this capacity, is presently successful use, which raises questions regarding the nation's underutilization of refinery facilities.

Since this has remained a important contented successful the industry, owners of refineries with this capacity, however, person shortages successful the transportation of crude lipid to their systems.

Crude lipid shortages

According to analysis, 3 facilities selected by the NUPRC to person regular crude allocations are not active, and 5 of these refineries person been granted support licenses but are not yet operational.

Additional probe showed that the 2,500 bpd Duport refinery is not operating, and the 10,000 bpd OPAC refinery is present not operating due to the fact that of inadequate feedstock. Additionally, the state-owned Kaduna refinery is not presently operating adjacent though it has been approved to refine products.

Despite the wide approval, the refineries' existent operational capableness is inactive acold beneath the licensed potential. The licenses were fixed to backstage investors successful the mid-stream assemblage with the anticipation that they would greatly summation Nigeria's refining capableness and lessen its reliance connected imported refined petroleum products.

However, Idoko listed further obstacles to these refineries' afloat operation, specified arsenic insufficient funding, postponed task schedules, and method issues. Reliance connected the nation's aging refineries, which are having trouble keeping up with home substance demand, has resulted from the situation.

Dangote suspends naira for crude

Due to concerns astir the naira-for-crude woody and a discrepancy betwixt the magnitude of crude allocated paid for successful naira and its existent sales, the Dangote refinery recently announced a impermanent suspension of its petroleum merchandise income to marketers successful naira.

Idoko emphasized that this spread successful operational capableness is not lone caused by backing but besides by method challenges, of which crude warrant is simply a large obstacle.

According to insiders acquainted with the development, the Nigerian National Petroleum Company Limited had fixed ample volumes of crude to its overseas creditors successful bid to settee the loans acquired by the firm, making it hard to prolong the naira-for-crude deal betwixt NNPCL and Dangote refinery.

The NUPRC manufacture information showed that 15 operators clasp licenses to make refineries. Photo Credit: Contributor
Source: UGC

The nationalist commandant clarified that these facilities' inability to find a feedstock root prevents them from scaling past the constituent astatine which an concern determination is made.

Idoko said,

“The large challenges that investors person had with completing the projected plants successful Nigeria is that a batch of these plants request to get past the Final Investment Decision signifier and for them to walk this stage, which is the last fiscal concern stage, they would person to warrant and allay the fears of investors connected immoderate challenges.“And 1 of the large fears that they person is the availability of crude. So crude availability is simply a large issue, and the quality making the rounds astir the unavailability of crude to refineries that are already operating is not making our lawsuit easier.

3 companies get support to conception caller refineries

Legit.ng reported the Federal Government of Nigeria, done the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), has issued a licence for the construction of caller refineries to 3 Nigerian companies.

NMDPRA, successful a connection shared connected X, said the 3 refineries volition lend 140,000 barrels per time (bpd) to Nigeria’s home refining capacity.

The companies approved to physique the refineries are Eghudu Refinery Limited, MB Refinery and Petrochemicals Company Limited and HIS Refining and Petrochemical Company Limited.

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Source: Legit.ng