Eye-popping budget figures are being released and I wouldn’t help jerking up straight when I saw that 250billion naira, about $1.6billion is going to be spent on Turn Around Maintenance(TAM) of our refineries. This is not the first time we hear of mind-blowing figures spent on these refineries. I didn’t waste time doing a quick maths and research and saw that 250billion naira can give us 15 new modular refineries, with total installed capacities of 445,000bpd, about the combined capacity of our present refineries and just above Nigeria daily need of refined fuel.
It is common knowledge that Nigeria is one of the largest producer of Oil & Gas in the world, placing 8th with present output of 2.7million bpd. But with these statistics Nigeria has been struggling for years to revive our crumbling refining and petrochemical sector. Current daily refining output stand at 170,000bpd as against the daily need of 440,000bpd. What this means is that we import almost 3/4 of our fuel need, spending a colossal #1.7trillion in fuel subsidy in 2011 alone. A large sum of this was lost to subsidy scams by business hunks close to the corridor of power. Even more embarrassing is that we import from non-producing countries and neighbors like Cote d voir and Niger republics.
I wonder if this administration think-tank, especially those at the helm of petroleum affairs are thinking at all. I dare to argue that with #250billion, and a little bit of thinking, we can put a refinery in every state. Current trend in the refining industries indicates that modular refinery are more efficient and cost effective. World Energy Consortium, a foremost American firm and pioneer in modular technology quotes about 200million dollars for a standard modular refinery, with output capacity of 30,000bpd. The project can be delivered with complete integrated LPG processing plant and co-generating power project. In case you are wondering what a modular refinery is, it is a small manageable refinery that can produce between 10,000 to 30,000bpd, with a possibility of adding more modular units to build the capacity up to 100,000bpd or more. A 30,000bpd capacity modular refinery can be completed in 18 months. If you look to Asia, it can be built for much less. A chines firm built such refinery with daily capacity of 27million barrels in Niger Republics with about 150million dollars. This means that the #250billion en-marked for TAM of three refineries can build us about 15 modular refineries with capacity of 30,000bpd each and a combined capacity of 450,000bpd! This is more than the combined installed capacity of the three refineries billed for TAM and enough for our daily need. But wait! I argued a refinery for every state. We can ‘rack’ our brain a little more.
Nigeria crumbled public infrastructure and government business has geared support for public private partnership(PPP). With #250billion, the federal govt can owe a major stake in a refining firm in every state, with the remaining shareholding going to the host states and private partners. There won’t be a better subsidy if the government earnings from this arrangement is used to subsidize fuel, which is in the first place will be cheaper than the landed cost of imported fuel. These refineries can be significantly cheaper if we look around. There are PPMC fuel depots all over the country that are grossly under-utilized, if not empty. These are not only ready sites for modular refineries, the refineries sited there won’t be building storage facilities again, and the extensive networks of pipelines can be modified to convey crude to these refineries.
The ancillary benefits of the above arrangement are many. Nigeria is quite a huge country and we have seen the benefits of unbundling a critical infrastructure from the telecom industry, and similar envisaged for the power sector. Having a modular refinery in almost every state will not only solve our problem of scarcity and distribution, it will take tankers from our high ways, with all the associated risks to lives and our roads. The opportunity of industrialization and business it will create around the country is huge. We know the subsidiary petrochemical industries that will spring up, aside thousands of jobs that will come with them. The success of Orient Petroleum in Anambra comes to mind. Many inland petroleum basins in the north and middle belt of Nigeria holds more crude that what Niger Republics, who Nigeria is looking to for refined fuel, is exploiting. With enough dexterity on the part of state governments who says the success of Orient Petroleum cannot be replicated in many of these states in our inland basins.
Except the budget for TAM is another scheme to save up with business crooks for 2015, our fuel nightmares can be over with #250billion. The old refineries can be privatized/sold to those who can run them. Our technocrats should put on their thinking caps and save us another scam. Enough of the wastage!