Kachikwu: Lack of Access to Finance Hampering Construction of 33 Private Refineries

US provides take-off grant for Eko refinery

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 licenced by the federal government, THISDAY has learnt.

THISDAY gathered that while some 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.

This is coming as the United States Government, through the US Trade and Development Agency (USTDA), has provided a take-off grant for 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.

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 Licence 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.

But the United States Government at the weekend came to the rescue of the Eko Petrochem and Refining Company Limited located in the newly created Tomaro Island Free Trade Zone of Lagos, as USTDA has offered a grant to finance the completion of the detailed analysis of supporting technologies and engineering for the implementation of the 20,000 barrels per day refinery.

Speaking on the island right behind THISDAY Corporate Head Office at the weekend, the US 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.

Symington also noted that the administration of President Muhammadu Buhari believes in private sector investments.

“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.

In his remarks, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who identified lack of access to funding as the major challenge of the 33 licensed refineries, added that the seed money provided by USTDA for the Eko Refinery is an indication that the refinery has a potential partner that could finance the project.

Kachikwu, who was represented by his Senior Technical Adviser, Mr. Rabiu Suleiman, also stated that the USTDA gesture has demonstrated the seriousness of the Chairman of Integrated Oil and Gas Limited, Captain Emmanuel Ihenacho in implementing the refinery project.

“I remember when we summoned all those licensed to build private refineries – about 33 of them today, to meet with the minister; the chairman of this organisation (refinery) was very conspicuous and very visible, especially when the threat of cancellation of licenses was mentioned. You can see the passion; you can see the commitment; you can see the determination to make this project a reality. And his voice was very loud, saying ‘please, don’t attempt to do that,’ promising that the challenges can easily be overcome,” Kachikwu said.

“Most of those who have been licenced 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 US – 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.

He promised to do whatever he can to support the project to meet his expectations and save his job, having made a commitment to resign if Nigeria does not become self-sufficient in petroleum products by 2019.

In his speech, the Chairman of Integrated Oil and Gas Limited, Ihenacho, who is also the Chairman of the refinery, noted that the US Government, acting through the USTDA, has accelerated the process of the planned development of the refinery.

According to him, the “grant is to specifically use 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.”