Business

65 companies get licences for private refineries

Published

9 years ago

August 28, 2015

Of about 285 Nigerian companies that submitted applications and underwent screening for the establishment of private refineries in the country, only 65 were able to scale through.
The federal government has therefore granted them licences to construct modular refineries, that is, mini-refineries with capacities ranging from 1,000 to 10,000 barrels per day, bpd, which can be assembled and separated easily for enhanced performance and efficiency.
President Muhammadu Buhari had in June, few days after his inauguration agreed to the award of Licence to Establish (LTE) as part of his administration’s plan to increase domestic refining capacity to meet local demand, thereby reducing huge import bills for subsidy.
Although the Department of Petroleum Resources, DPR, the industry regulator, feigned ignorance of the development, one of the beneficiary companies confirmed to Vanguard that the measure is also meant to cushion the impact of crashing oil prices at the international market.
The shock is not only in the period the approvals were given, but also in the numbers granted considering the fact that 18 LTEs were granted in 2002, but only one of them had come on stream with just 1,000 barrels per day, bpd capacity.
The refinery is operated by Niger Delta Petroleum Resources, NDPR, which produces only automotive gas oil, AGO, popularly called diesel.
A top management staff of DPR said “I am not aware of any such huge approval.”

When prodded further, he added: “What I know is that DPR recently released guidelines for the establishment of refineries, and we had road shows in Lagos, Port Harcourt and Abuja, to sensitise investors.”
Ordinarily, there are three levels of approval for setting up private greenfield (new) or modular refineries in the country.
They are Approval to Establish, LTE; Approval to Construct, ATC, and Licence to Operate, LTO.
An investor must overcome the requirements in each level of approval before proceeding to the next, as shown in the guidelines.
DPR had explained that the guidelines for the establishment of modular refineries in Nigeria was configured with the aim of shortening the approval time for licensing of refineries.
To woo investors to the project, DPR also reduced the licensing fee for new refineries from $1 million to $50,000. Government is desirous of refining at least 50 percent of its crude output in-country, not only to reduce import dependence, but also be an exporter of refined petroleum products.

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