The coming on stream of these proposed refinery projects will reduce the country’s over dependence on the importation of petroleum products. It will also boost the supply of petroleum products in the country.
It is further envisaged that due to the projected excess capacity, Nigeria could transform itself from an importing nation into a major exporter of petroleum products in the long run. This will impact positively on the economy as it would lead to the creation of more jobs.
IPMAN’s national president, Chinedu Okoronkwo, said the association will execute the project in conjunction with yet-to-be-named foreign investors.
Okoronkwo said: “We are in discussion with our foreign investors with the arrangement and agreement to commence work before end of July, while the groundbreaking ceremony is expected to commence in the fourth quarter of the year. Our investors plan to invest a huge amount of money, like $3bn, into the Nigerian economy. We are also putting in our own money.”
In the past, the government made futile efforts to privatise the refineries with a view to making them more efficient. But oil workers and labour unions, who allege that the government would end up selling the refineries to their cronies at ridiculously low prices, have always resisted the planned privatisation of the refineries.
The government stirred the hornet’s nest earlier in the year when it mooted the idea of unbundling the refineries. Like previous attempts, the plan fell through due to stiff resistance by the various stakeholders. There are indications the government may have put off the proposed privatisation of the state-owned refineries until after the 2015 general elections in Nigeria.
These factors make investments in greenfield refinery projects a viable proposition for investors. This is what may have informed the decision of the Dangote Group and IPMAN to construct new refineries in the country.
The establishment of more private refineries in Nigeria will hopefully end the scarcity of petroleum products and eliminate the long fuel queues that often rear their ugly head when importers disagree with the government over payments or when oil workers go on strike often over welfare issues.
Effects of the Petroleum, Industry Bill
Analysts believe the passage of the Petroleum Industry Bill (PIB) currently before the National Assembly, will attract more investments in the oil and gas sector. The Bill, which is designed to guide operations in the sector, was initiated to correct perceived flaws and address structural, policy and managerial issues in the Nigerian sector. The Bill also seeks to block identified loopholes in policies and ultimately improve transparency and efficiency.
When the Bill is fully signed into law, it is expected to address alleged abuses by stakeholders, eradicate corruption and completely restructure the industry to make it more responsive to the needs of both Nigerians and potential investors.
At an ‘enlightenment’ workshop on the PIB held in Lagos in June, Nigeria’s Minister of Petroleum, Mrs Diezani Alison-Madueke, said: “It is my firm belief that the PIB embodies the essential reforms that will put the petroleum sector on the path of robust growth. Nigeria fully expects to be a significant hub in the Africa region for petroleum activities.”
Clearly, bright prospects await investors in local refineries as the demand for petroleum products continues to rise in the country. But beyond the passage of the PIB, they want the government to pay closer attention to infrastructural deficiencies, particularly poor road networks in the country and the epileptic power supply. This will enable investors in local refineries such as the Dangote Group and IPMAN, to reap optimal returns on investment.