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The Nigerian National Petroleum Corporation (NNPC), has commenced move to attract 20 companies to make substantial investment worth $20 billion in order to meet the Federal Government’s target of increasing refining capacity in the country.
Investigations showed that the apex oil corporation has, in the past few weeks, been engaging the investors in order to inform, educate as well as assist them to prepare various packages required in the process of applying for licence to set up modular refineries.
On completion of the engagement, the promoters of the modular refineries would be equipped with vital knowledge to submit their applications to the Department of Petroleum Resources (DPR), vested with the responsibility to issue such licenses.
Confirming the development on the sideline of a forum on modular refineries in Lagos, General Manager, Refining Directorate, Mr. Ahmed Danlade, disclosed that the NNPC decided to support the effort in order to guide potential investors to invest in the sector.
He said this became very important, especially as many potential investors did not know much about the sector.
Danlade added: “Building a modular refinery is not cheap. It costs millions of dollars to establish a modular refinery with 10,000 barrels per day capacity.
“But building a 100,000 bpd to 150, 000 bpd modular refinery can cost between $1billion and $2billion. So, investors need to have adequate funds to go into the business,” he added.
Also speaking, the Associate Director, PriceWaterhouseCoopers Limited, Olumide Adeosun, said that there was a great need for investors to invest in refining, targeted at reducing dependence on importation.
“Current demand for refined products in the West African sub-region is estimated at 39 billion litres, and refineries such as SIR (Ivory Coast), SOGARA (Gabon) and SAR (Senegal) cannot meet this. There is an opportunity for potential uptake by neighbouring countries, if the market has Nigeria’s refined products readily available,” Adeosun said.
According to him, “Imports currently account for 90 per cent of Premium Motor Spirit (PMS) supply, and 60 per cent of Automotive Gas Oil (AGO) supply. Nigeria consumes over 17 billion litres of PMS annually and consumes over 3 billion litres of AGO.