Nigeria, Niger Set up Teams on 150,000bd Border Refinery…
Dangote secures $4.5bn financing for plant
Nigeria and the Niger Republic yesterday made some progress on the planned construction of 150,000 barrels per day (bd) processing capacity refinery to be built in a border town in Katsina between both countries.
Both countries in Abuja set up two task teams to be jointly managed by officials from them.
They said they would seek private sector finance to execute the projects.
The task teams, which were inaugurated by President Muhammadu Buhari and President Mahamadou Issoufou of Niger, would develop detailed project implementation roadmap that covers bankable feasibility studies for the refinery and associated pipeline project; optimal project site and pipeline routes; security plan; as well as selected consortia of investors for the projects.
Headed by the Minister of State for Petroleum, Dr. Ibe Kachikwu, and his Nigerien counterpart, Mr. Foumakoye Gado, the teams would be expected to submit their report by December 2018, after which implementation of the project would commence and possibly last over two years.
Speaking at the ceremony, which held at the State House, Buhari said the initiative would provide a reliable market for stranded crude oil volumes from Niger Republic as well as provide petroleum products for Nigeria to enable it exit importation of refined products as she planned to do in 2019.
He noted the project would be private sector driven with the full support of the governments of both countries.
“Nigeria and Niger have excellent relations for several decades, as neighbours, sharing a long border with common cultural and historical ties. Nigeria sees this cooperation on crude oil export from the Republic of Niger and construction of refinery facilities in Katsina State as a win – win for both nations,” said Buhari.
He further stated: “In addition, it is my hope that the current frontier exploration efforts in the northern part of the country (Chad Basin, Gongola Basin, Sokoto Basin, Bida Basin and Benue trough) will also result in the provision of additional hydrocarbon inflow to the corridors of the proposed pipeline and a potential refinery around Kaduna axis.
“I am happy that several productive engagements held between the Nigerian and Nigerien authorities have resulted in the positive agreements to progress with activities on this important project.”
Inaugurating the task team, the president said, “A steering committee has been set up to be chaired by the Nigerian Minister of State for Petroleum Resources and the alternate chairman is the Nigerien Minister of Petroleum, to provide strategic leadership, direction and governance oversight for the project.
“Further to this, a senior level joint technical team is carefully selected based on competence to develop the implementation roadmap and strategy on both the refinery and pipeline projects. This team will be led by Nigeria’s engineer, Rabiu Suleiman supported by the Director General Hydrocarbon of Niger Republic.”
Nigerien president, Issoufou, agreed with Buhari that the project would strengthen existing economic and political ties between both countries.
He said, “The country sees the refinery as way of uniting with the country after being separated by colonialism. The initiative remained a way of growing intra-African relationship.”
Providing some insights into the projects, Kachikwu explained the decision to build the refinery and pipeline was taken after it was discovered the initial plan to build a line to the Kaduna refinery for crude oil supplies from Niger was uneconomical.
He noted that almost nothing of both governments’ funds would be put in the projects, adding that investors were already lining up to partake in it.
“There is a decision to build a pipeline from Niger Republic into Nigeria’s boarder town and construct a refinery with capacity probably between 100,000 and 150,000 barrels per day. It is all dependent on the Niger crude volume and what they find.
“The study has to be done and we know what is involved. The technical and financial components, negotiating the finance. We have mentally structured our minds to a two-year period but it depends on what we find,” Kachikwu explained.
He noted that Katsina was chosen to host the refinery because it was close to Niger, adding that there was a potential for an extension to Kaduna.
He said the project would have: “Private-sector led multi-stakeholder partnership with or without equity participation from federal governments, state governments or agencies as necessary.
“Long term contracts for the supply of feedstock; adequate funding from reputable financial institutions; provision of guarantees and incentives that will safeguarded investments and returns at the setup of the company; respect for the sanctity of contracts.”
In a related development, the President of the Dangote Group, Alhaji Aliko Dangote, has arranged more than $4.5 billion in debt financing for his Nigerian oil refinery project and aims to start production in early 2020, Reuters reported yesterday.
Dangote, who built his fortune in cement, is building the world’s largest single oil refinery with capacity of 650,000 barrels per day (bpd) to help to reduce Nigeria’s dependence on imported petroleum.
Africa’s richest man had disclosed that the $12 billion oil refinery project was expected to become operational in 2019.
Despite being a crude oil exporter, Nigeria imports the bulk of its petroleum because of a lack of domestic refining capacity.
Lenders would commit about $3.15 billion, with the World Bank’s private sector arm providing $150 million, Dangote said, adding that he was investing more than 60 percent from his own cash flow.
According to him, Standard Chartered Bank was arranging funds for the project.
“We will end up spending between $12 billion to $14 billion. The funding is going to come through equity, commercial bank loans, export credit agencies and developmental banks,” Dangote said in an interview in Lagos yesterday.
“Hopefully, we will finish mechanical (construction) by next year and products will start coming out in the first quarter of 2020.”
The Central Bank of Nigeria (CBN) would provide guarantees for about N575 billion in local currency for 10 years, with African Development Bank providing a $300 million loan. Trade banks from China, India and some European countries are also in the mix, Dangote said.