Eko Refinery: Keeping Its Eye on the Ball

Despite the sundry challenges that stalled construction of most of the licensed private refineries in Nigeria, Eko Petrochem and Refining Company Limited has remained undaunted, resulting in the recent funding support it received from the United States government, through the US Trade and Development Agency. Ejiofor Alike reports

A major challenge facing Nigeria and indeed, West Africa, is weak refining capacity, which has made the sub-region heavily dependent on imported petroleum products.
Apart from losing the scare foreign exchange running into billions of dollars yearly on importation of petroleum products, Nigeria’s weak refining capacity has forced it to export all its crude, thus losing the value-addition inherent in local refining.

While the 445,000 barrels per day capacity refineries operated by the Nigerian National Petroleum Corporation (NNPC) in Port Harcourt, Warri and Kaduna have exhibited woeful performance in recent years as a result of lack of effective turn around maintenance (TAM) and obsolete technology, most of the private investors licensed to build private refineries have been plagued by lack of funding to embark on the construction projects
After the efforts by successive administrations to rehabilitate the NNPC’s refineries and ensure their full capacity utilisation hit the rocks as a result of the obsolete technology and lack of funding to carry out effective TAM, the present administration has turned to the private sector to actualise the country’s dream of exiting importation of petroleum products by 2019.

Already, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu had staked his job, offering to resign if the country does not attain self-sufficiency in fuel supply by 2019.

Aside from the planned concession of the existing refineries to the private investors, and the concept of co-location of refineries, the current administration is also focusing on the private investors licensed to build modular and private refineries.

Studies by the federal government have shown that of the 41 million litres of petrol projected daily consumption in Nigeria by 2025, 50 per cent is expected to come from the existing refineries on attaining full capacity utilisation after concession, while Dangote Refinery will account for 95 per cent, thus making the country a net exporter of petroleum products.

However, the licensed private refineries are not making appreciable efforts in project implementation to boost the government’s 2019 target as a result of sundry challenges, prominent of which is funding.

There are three levels of approval for setting up private greenfield or modular refineries in Nigeria – License to Establish (LTE), Approval to Construct (ATC), and Licence to Operate (LTO).
Of all the 33 private refineries that were given License to Establish (LTE), only the 1,000 barrels per day refinery operated by the Niger Delta Petroleum Resources in Ogbelle in Rivers State has come on stream.

The refinery currently processes crude oil from the flow station operated by the Niger Delta Exploration and Production (NDEP) Company into diesel.
Most of the other investors have not kicked off the construction works as a result of difficulties in accessing funding.

Dangote Group is also pursuing the construction of its 650,000 barrels per day refinery project aggressively with a target to resume operation by the end of 2019.
In the case of modular refineries, the Eko Petrochem and Refining Company Limited, a private Nigerian refinery and petrochemical company being promoted by Integrated Oil and Gas Company Limited at the Tomaro Industrial Park Free Trade Zone in Amuwo Odofin Local Government Area of Lagos State, is leading in terms of project implementation.

Following its pioneering role in the federal government’s modular refinery scheme and the remarkable progress recorded in project implementation, Eko Refinery and has successfully positioned itself to acquire the pioneer status and its attendant incentives.

However, the difficulties faced by private investors in accessing finance to complete detailed engineering analysis and commence construction work after obtaining the approval to construct (ATC) is the major challenge that hampers the execution of majority of the 33 private refineries licensed by the federal government.
While most of the refineries are still at the detailed engineering design stage, others have been given approval to construct (ATC) by the Department of Petroleum Resources (DPR) but could not proceed with the projects as a result of paucity of funds.

Eko Refinery blazing a trail

Eko Petrochem and Refinery’s pioneering efforts received a boost recently as the United States Government, through the US Trade and Development Agency (USTDA) provided a grant to be specifically used to finance the completion of the detailed analysis of supporting technologies and engineering for the implementation of the 20,000 barrels per day crude oil refinery.

Speaking at the island right behind THISDAY Corporate Head Office during the grant signing ceremony, the United States Ambassador to Nigeria, Mr. Stuart Symington urged Nigerians to invest in Nigeria so as to have the right to complain when things are not going right.
“He (Captain Emmanuel Ihenacho) is investing at the time with a government that believes profoundly in the power of individual citizen and entrepreneur. He is doing it at a time with government that believes that Nigeria can do what can be done anywhere in the world,” Symington said.

Recounting his earlier meeting with Ihenacho, the US Envoy said: “His big point is that he said, and this is how I pretty remembered it and may be you all can help to remember – he (Ihenacho) said that the reason he is doing this is that unless he made this investment, unless he did this thing to improve the economy of Nigeria, to make sure that foreign currencies are retained and that foreign currencies are earned, to put Nigerians to work and bring world class expertise to Nigeria, he said ‘I would not have right to complain, unless I do something about it. This captain of a ship has now become a pilot for the country because the greatest question that any country can ever ask is ‘who is leading us and which way are we going and who is in the boat? And the answer in Nigeria is that the people of Nigeria have to lead,” Symington explained.

In his remarks, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who was represented by his Senior Technical Adviser, Mr. Rabiu Suleiman, also stated the USTDA gesture had demonstrated the seriousness of the promoters of the refinery in implementing the project.
“Most of those who have been licensed to establish refineries in Nigeria have two major challenges. One is financing. We all know that it is very difficult to raise funding and therefore, when you hear that the USTDA is extending its hands of fellowship and support in providing initial seed money required to go beyond the detailed engineering design, that also shows that behind him – the visionary of this project, there is a potential partner that is likely to support and to provide the required finances to establish this particular project.

And for him to be able to bring down to this island, a representative of the United States – our own US President, that is, the Ambassador himself, to this island, is another demonstration of commitment and determination to do what is ever is necessary to see that this project takes place,” Kachikwu added.

An elated Ihenacho, who is the Chairman of Integrated Oil and Gas Limited and also Chairman of the refinery, noted that the USA government had by this gesture, accelerated the process of the planned development of the refinery.

He, however, appealed for more support to raise the $250 million required for the entire project.
“Let me use this opportunity to restate our unflinching commitment to actualising this modular refinery project. The support and grant that the USTDA has given to us added tonic as the fund will go a long way to ensuring the timely completion of the proposed developments and the realisation of the envisaged underlined economic and social impacts,” Iheancho said.

“May I also very quickly state that whilst we continue to celebrate the delivery of this support assistance from the USTD, we also need to source significant investment funding to fully actualise the dream of this project. To give you an idea as to what kind of money we require, the scale of the cash investment required is of the order of $250 million. So, I am hopeful that one of the messages that will be carried home by our august visitors is that there is a Nigerian investor sitting on a free zone – 75 hectares in size, waiting for people who want to invest equity or who might indeed want to loan us some money on commercial terms. We are not seeking to get it freely,” Ihenacho added.

Speaking on the benefits of the project to the Nigerian economy, Ihenacho stated that “if we are able to retain the foreign exchange spent in the volumes that we currently import, I tell you our economy will be transformed immediately; that is why we are stuck in this thing”.

In his speech, the acting Director of USTDA, Mr. Thomas Hardy said the refinery project would provide an excellent opportunity for US businesses to export technologies and services to boost Nigeria’s refining capacity.
“We are proud to support this new project, which will lead to infrastructure development and economic growth in Nigeria,” Hardy said.

Also speaking at the grant signing ceremony, the Project Director of Eko Petrochem and Refining Company Limited, Mr. Gordon Paton stated that his 25 years of experience working in Africa, primarily in oil field construction, has equipped him for the assignment.

The Managing Director of Nigeria Export Processing Zones Authority (NEPZA), Hon. Emmanuel Jime noted that the recovery of his misplaced mobile phone few minutes after he complained to Ihenacho is clear evidence that the refinery project is being founded on the basis of sincerity and honesty.

Jime, who declared Tomaro Island a FTZ at the ceremony based on the approval of President Muhammadu Buhari, said the move was to make Nigeria an attractive destination for investments.

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