Olusola Bello
Stakeholders in the oil and gas industry have picked holes in the minister of Petroleum, Timipire Sylva’s, continuous emphasis on expectations from Dangote and Modular refineries without telling Nigerians at what price they are ready to sell their products.
According to them, asking to know the price they would sell their products is a fundamental question the minister should answer. So that after Nigerians would know what to expect when the products start coming from these refineries they have little respite in terms of price.
A former top executive of the Nigerian National Petroleum Corporation (NNPC) Limited said he was amazed that the minister of state for petroleum Resources, Timipire Sylva, keep saying some modular refineries are planned or coming on stream without letting the public know the arrangement the government has entered into with them..
He said Modular refineries do not produce Premium Motor Spirit (PMS) or petrol. They produce diesel and other heavy products, so this will not help solve petrol subsidy problem.
“We are told Dangote Refinery is coming on stream by September and can supply all our petrol needs. At what price will it sell,” he asked.
Other stakeholders also want the government to interrogate how the minister of Finance, Zaineb Ahmed and NNPC came about the N3 trillion NNPC is demanding for subsidy.
Following the postponement of the removal of fuel subsidy, the minister of state for Petroleum Resource, Timipre Sylva has been saying that the country expects some modular refineries to come up to shore up the country’s refining production capacities.
They said the same minister had described modular refineries’ contribution to the country’s refining needs as a drop in the ocean, adding that modular refineries cannot replace the traditional large-scale facilities.
The stakeholders stated further that Against certain permutations, the rash of modular refineries in the country will not result in reduced pump prices, neither will it considerably positively impact local refining even if all the plants begin operation today.
It is a very tall order the issue of modular refineries making serious impact, one of the stakeholders stated.
For example, modular refineries are very small refineries: 1,000 bpd to 2,000bpd. In most cases they are so small that they don’t have the catalytic cracking unit to crack the crude, so they don’t produce the lighter ends like petrol.
They produce mostly diesel and other heavier products. So, they cannot be a replacement, they will only be an augmentation, because if you have 100,000 barrels, you will need 2,000 barrel refineries to give you the capacity that is being produced.There are also issues of economy of scale.
A publication by PricewaterhouseCoopers (PwC), on the country’s inability to refine locally, submitted that over the last four decades, Nigeria has consistently struggled to keep its refineries functioning optimally, despite having a nameplate refining capacity that exceeds demand.
It stated that Nigeria ranks as the 3rd highest importer of petroleum products in Africa, bringing now almost 100 per cent of products consumed
However, the organisation noted that in spite of the setbacks, the inherent opportunity for Nigeria’s erstwhile dormant refining sector holds bright prospects for the future and a recognition of key drivers will accelerate the imminent refining revolution, one of them being the establishment of modular refineries.