The Challenge of Affordable Petroleum Products in Nigeria: Artisanal (Modular) Refinery to The Rescue


Edet Ekpenyong

The recent increase in the price of petroleum products by the government of President Muhammadu Buhari is seen by many Nigerians as a recurring decimal which like a molten magma, may erupt like active volcano if not holistically managed. It is glaring that reactions and the socio-economic impact of the recent zin crease of Petroleum Pump Price by the Petroleum Pricing Marketing (PPMC) from ex-deport price of N138 to N151.56 per liter, triggering marketers to increase pump price from N148 to N162 per liter is hitting the nation as a hurricane, increasing the existing burdens on Nigerians.
However, the unfortunate report by Nigeria Natural Resource Charter (NNRC) indicates that the sum of N276.87bn was spent between 2015 and 2018 to carry out repair works under TAM scheme on three of the refineries in Port Harcourt, Warri and Kaduna.

The report further indicated that At least $396.33 million (about N152.4bn) had earlier been spent between 2013 and 2017 on TAM schemes on the refineries.

It is obvious that Nigeria has all the potentials required to refine all the petroleum products required in the country if the right political will is adopted, it is high time Nigeria began to look inward and embrace local contents in scheme of its economic reckoning especially in refining of crude petroleum.

Over the years’ activities of artisanal refineries in Nigeria have been considered illegal mainly because they source their raw materials (crude oil) through unofficial sources: which means they do not obtain their raw materials through the NNPC, the government Agency that oversees the oil and gas sector.

The current move by the Federal Government through the Office of the Senior Special Assistant to the President, Niger Delta Affairs to integrates the artisanal refinery operators into the mainstream of refinery activities is timely and commendable in view of the deregulation of petroleum products in the country.

The decision of key stakeholders at the meeting coordinated by the Office of the Senior Special Assistant to the President on Niger Delta operators by encouraging them to form cooperatives and
set up modular refineries to create sustainable production chain in the crude oil production sector is a welcome development and needs to be given backing.

Some of the background reports from resolution meeting by key stakeholders in the industry which include Nigerian National Petroleum Corporation (NNPC), Nigerian Extractives Industries Transparency Initiative (NEITI), National Oil Spill Detection Response Agency (NOSDRA), Petroleum Technology Development Fund (PTDF) and artisanal refinery operators coordinated by the Office of the Senior Special Assistant to the President on Niger Delta Affairs was expository and revealing.

At the meeting it as admitted that large quantum of petroleum products consumed in Nigeria are produced or refined and circulated by the operators of local or “illegal or artisanal or modular or “puu fire” refineries operators in the Niger Delta states with camps in Anambra ,Kogi, Lagos, and indeed most states where the crude oil pipeline on NNPC traverse.

This is not a political issue and the government should not let anybody politicize it so the government must review the situation and make sure that they potentials of artisanal refinery operators are explore because they have the capacity to refine petroleum products needed in the country if given the necessary backing.

The integration of artisanal refinery operators or modular refineries to produce or refine petroleum products for local consumption in Nigeria should be the given the necessary backing and harmonies for sustainable and affordable fuel supply in the country and also made to be part of the post COVID-19 economic recovery blueprint.

It is high time government develops Local Content Policies (LCPs) to increase jobs and open business opportunities for the nation, especially in the oil sector. Stakeholders in the oil and gas policy development strategies should include in-depth consultation to maximize the decision makers’ knowledge-pool. They should also be able to manage people’s expectations and uphold transparency.

The Senior Special Assistant to the President on Niger Delta Affairs, Senator Ita Enang in one of his engagement meeting with the Domestic Refinery Owners Association of Nigeria (DROAN) urged Nigerians to work hard to ensure citizens buy fuel at the rate of N100 per litre.

Enang said the aim of the engagement meetings is to harness and integrate locally refined products into the petroleum market to help crash the price of petroleum product in the country.

He added that the reason why petroleum products prices went up was due to the process of extracting, exporting, refining and retuning it back to the country has made it expensive and cumbersome.

Speaking at the interactive session where they DROAN solicited for the federal government legalization of their operation in the creeks Domestic Refinery Owners Association of Nigeria, DROAN, professed that crude oil products refined in the creeks of Niger Delta are much cleaner and safer than the one allegedly imported from outside the country.

In view of this, the approval and implementation of modular refineries by encouraging artisanal refineries operators to form cooperative and set up modular refineries will not only aid economic growth in the Nige Delta region and Nigeria in general but also create a sustainable and alternative sources livelihood to tackled poverty, unemployment and self-sufficiency especially in the supply of petroleum products.

Policy formulators and drivers are requested to adopt the resolutions arrived at the meeting coordinated by the Senior Special Assistant to the president, Niger Delta, Senator Ita Enang with key stakeholders in the oil and gas sector.

The model of the recently approved and inaugurated Presidential Artisanal Gold Mining Initiative should be approved for the Artisanal Local Refineries Operators and incorporated into the mainstream refinery process and the Post Covid-19 economic recovery programme.

This will streamline the entire value chain of the local refinery operations towards its
integration into the main oil and gas sector for the purpose of regulation, allocation of crude and land, taxation, local content development and financing.

It will engage and employ approximately a million youths from the Niger Delta Region, anchoring on the presidential declaration of taking 100 million Nigerians out of poverty by 2029.

Stakeholders in the sector should initiate legalization process because this will increase local production of petroleum products in Nigeria through the participation of indigenous licensed modular refinery operator, having undergone process.

It will also reduce to it barest minimum the level of crude oil theft and oil spillage on the environment which in most cases is perpetrated by illegal refinery operators. Most importantly, it will reduce to its minimum the level of death of security personnel arising
from militant conflict, high budgetary allocation and loss of military hardware
associated with the deployment of security forces to guard and protect crude
oil installations in the Niger Delta region.

Given an estimated population of about 200,000,000 people with about 60 percent of this figure said to be youths, and the level of unemployment estimated at 23.1 per cent according to
Nigeria Bureau of Statistic, the Federal Government by legalizing and incorporating these operators into the mainstream oil sector will net in billions of dollars as revenue, in the same vein project the next level agenda of the President Buhari administration.

It is imperative for us at this point in time to engage Nigerian potentials, protocols the environment, develop and encourage local technology and above all, to be at one with the world where each country produces what it uses.

It would also be appropriate and timely for the President to set up a special task force comprising all the relevant stakeholders with a timeline to initiate a framework and blueprint for the identification, region.

The proposed Special Task Force for the approval and inauguration of Artisanal Local (Modula) Refineries of Nigeria is expected to develop a Memorandum of Understanding (MoU) with all the stakeholders for the allocation of license, crude, land and funding.

The task force is also expected to create the platform and framework for the collaboration with local and foreign experts for the construction of modular refinery operators to be at par with their counterparts in the mainstream.

The security protection and amnesty to these persons who have volunteered to help, proffered the information that will enable the resolution and integration be please assured to enable successful attainment of the purpose.

This will increase local refining capacity, sustain supply and reduce importation of petroleum products. Nigeria needs to focus on how to boost local refining of petroleum products to enhance economic development in the global market.

The Office of Senior Special Assistant to the present on Niger Delta Affairs is coordinating a global summit on the Integration of Artisanal refinery into the mainstream refinery in Nigeria. The summit will bring together all the stakeholders and potential investors in the Modular refinery industry to deliberate and develop a multilateral approach with concerted effort to explore the potential of Artisanal Modular Refinery in Nigeria. The outcome of the summit is expected to address all the calamities brought by increase in the price of petroleum products in the country and the negative impacts it brought to all sector of the economy.

This is the best chance to grow Nigerian petroleum industry as the global economy struggles to recover from the ravages of the pandemic.

* Ekpenyong is the Media Aide to the Senior Special Assistant to the President Niger Delta Affairs.