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How investors stall govt’s drive for private refineries…

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Like a failed dream, the strategic plan to mobilise private interest in local crude oil refining may have run into a brick wall.

 

The licencees for private refineries have recoiled into their respective shells, seeking other opportunities in the oil and gas sector.

 

The Federal Government has since 2002 to date, issued over 39 licences to private operators to establish refineries of various capacities in the country, to lift the profile of local refining capacity from the current 445,000 barrels per day (bpd), a result of ill-maintained low capacity utilisation of four facilities owned by the government.

 

But so far, only the Niger Delta Petroleum Resources, located in Ogbelle, Rivers State, with Dr. Layi Fatona as the promoter, has commenced production of 1,000bpd of refined oil.  Also, Orient Petroleum Resources Plc has completed the detailed engineering, sourced the modules of its refinery and completed site acquisition, perimeter and topographical surveys, geotechnical, geological and hydro-geological surveys, site civil engineering works prior to construction of internal roads and reinforced concrete plinths for installation of refinery equipment.  But it is yet to start production.

 

Indeed, virtually all the licensed operators had serially defaulted on their respective deadlines to commence production, leading to licence withdrawals on their part, with even increased reluctance for mandate renewals as stipulated in the enabling law.

 

Factors cited as challenges for the takeoff of the various projects by the licensees included huge upfront start-up fee; lack of sovereign guarantees to secure cheaper loans from the international finance market; and uncertainty over guarantee of free market pricing policy.

 

Despite government’s reconsideration of the start-up fee in favour of the licencees, the investors still failed to show serious commitment, thereby truncating initial objective of the private refineries’ initiative.

 

However, a source at the Department of Petroleum Resources (DPR) told The Guardian that the agency had already processed new applications for private refineries and that they were now awaiting approval from the Ministry of Petroleum Resources.

 

The source said that the new applicants were depot owners who may not have the challenges of bank guarantees.

 

The source added that the 39 licences would have been able to process over 2.654 million barrels per day, which would have reduced the country’s dependence on fuel importation.

 

For instance, Amakpe Refinery Plant, one of the companies that got a  licence was configured to process 6,000bpd of crude oil from Qua Iboe.

 

The existing four local refineries (445,000 bpd capacity) only contributed about four to 20 per cent in the past five years to the national Premium Motor Spirit (PMS) consumption in the country.

 

The Guardian’s enquiries revealed that in May 2002, the Department of Petroleum Resources (DPR) granted licences to 18 private refineries to operate out of which only one was able to come on stream.

 

The successful applicants were: Akwa Ibom Refining and Petrochemicals Limited, Badagry Petroleum Refinery Limited, Clean Waters Refinery, Ilaje Refinery and Petrochemicals, Niger Delta Refinery and Petrochemical Company Limited, NSP Refineries and Oil Services Limited, Ode-Aye Refinery Limited, and Orient Petroleum Resources Limited.

 

Others were Owena Oil and Gas Limited, Rivgas Petroleum and Energy Limited, Sapele Petroleum Limited, Southland Associates Limited, and South-West Refineries and Petrochemical Company, Starex Petroleum Refinery Limited, The Chasewood Consortium, Tonwei Refinery, Total Support Refineries, and Union Atlantic Petroleum Limited.

 

As at 2010, Amakpe International Refinery Incorporated with capacity to process 12,000 bpd got its approval to operate revalidated in 2007, but got stuck due to political reasons in Akwa Ibom State.

 

Resources Petroleum and Petrochemicals International Incorporated with capacity to process 100,000bpd, located in Ikot Abasi, Akwa Ibom State, also got its Approval To Construct (ATC) revalidated in 2010. Sapele Petroleum Limited with 100,000bpd located in Sapele, Delta State, also got its ATC revalidated in 2010. Rehoboth Natural Resources Limited, with capacity to process 12,000bpd got permission to operate in 2008, but applied to convert ATC to Licence To Establish (LTE) as 2010.

 

Amexum Corporation with capacity to produce 100,000bpd, complained of lack of financing which stalled the project’s takeoff. Antonio Oil, located in Ogun State, with capacity to produce 27,000bpd, commenced civil and structural works on its site, but was unable to go farther.

 

Gasoline Associates International Limited Refinery, located in Ipokia Ogun State, with 100,000bpd capacity got its LTC granted and was also unable to continue.

 

Ologbo Refinery Company Nigeria Limited, located in Ologbo, Edo State, with 12,000bpd capacity, completed its engineering package, but its licence was not renewed by DPR and could therefore not go further.

 

On the upfront start-up fee, DPR sources noted that ‘ultimately, the government reconsidered and accordingly reduced the fee in line with investors’ expectation; in spite of this concession, the investors still failed to show serious commitment; raising funds locally was obviously a problem, as bank interest rates of 20 per cent and above would make borrowing for such a project a suicidal mission!

 

‘On the other hand, much cheaper foreign loans required certain sovereign guarantees that government did not consider necessary.  Other investors demanded a free market pricing policy that eliminated subsidies, as the uncertainty and time lag related to subsidy refunds could jeopardise the ultimate  success of such ventures.’

 

When it became evident to DPR in 2007 that the majority of the 18 oil refinery licencees in Nigeria did not have either the financial resources or engineering expertise or the zeal to follow DPR’s specific guidelines,  it  cancelled all the outstanding licences and only a few reapplied under more strenuous guidelines.

 

The source said that when it became evident that the investors were complaining of the stringent conditions, the DPR removed the statutory $1million performance deposit required from investors, for the establishment of private refineries in Nigeria.

 

He said: ‘The government had realised that the deposit requirement was a disincentive to investors who were willing to establish refineries in the country. The requirement, which is contained in the ‘Guidelines for the establishment of hydrocarbon processing plant (Refinery & Petrochemicals) in Nigeria,’ states that a $1million refundable deposit is to be made by an investor for every 10,000bpd refinery capacity to be established.

 

He stated that this move was part of government’s strategy to encourage private sector participation in crude oil refining and also her desire to locally refine 50 per cent or more of Nigeria ‘s crude oil.

 

The DPR revoked earlier licences issued to investors in 2004, citing lack of credible milestones by the companies, and introduced the 2007 revised guidelines, which contained the $1million refundable deposit requirement.

 

He added that the government had reviewed the law that guides the establishment of private refineries and was now awaiting the final approval.

 

On the process of getting the licence, the DPR source stated: ‘The first stage is to get a licence to establish. The next stage is the submission of the basic engineering design package of the plants to the DPR at the completion of which an approval to construct would be granted to only those who meet the specifications. Those firms given the licences usually have up to two years to meet the requirements of the second stage, or lose the preliminary licences.

 

‘Successful applicants are expected to meet the necessary requirements under this stage within two years of issuance of the preliminary licences. Companies that fail to meet the above requirements within the stipulated period will automatically lose the preliminary licences.’

 

The last stage of approval is a licence to operate a future plant, which would affect only companies that successfully go through the second state.

 

He said that over the years, many of the applicants got stuck at different stages of the processes of the projects and their licences were withdrawn.

 

A top official of an International Oil Company (IOC), who spoke on the condition  of anonymity, tied  the company’s participation in investing in private refinery to the quick deregulation of the downstream sector.

 

He said that a deregulation policy was the best solution to petroleum scarcity in the country, stating that it was the only condition on which the company would invest in building private refineries in the country.

 

According to the source, ‘we believe that deregulation is the best way forward for the oil and gas industry and the country because if the sector is deregulated, private operators would be able to build new refineries and there would be healthy competition.

 

‘We cannot go into refining because the business environment is not conducive right now.  The banks are not ready to give out loans for such investment and we cannot approach our shareholders. There are so many loopholes.  We do not know the quantity of fuel being brought into this country. Smugglers are smuggling fuel into this country on daily basis and how do you think we would be able to make it? It will not be easy competing with big refineries outside the country. Our company is selling off some of its refineries around the world because of its inability to compete.’

 

He stressed that if the issue of subsidy continued to drag, it would be difficult for practitioners in the industry to build a new refinery.

 

He said the company would continue to operate as a profitable and resilient organisation, able to compete effectively in a fully deregulated downstream industry.

 

Reacting to this development, the President, National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dr. Herbert Ajayi, called for an incisive review of the factors that made those previously granted licences for refineries not to start operations, with a view to putting right whatever could have been wrong.

 

‘All private operators previously granted licences for refineries should be re-invited to partner the government and be assured of the supply of feed-stock of crude oil, the refusal of which, NACCIMA understands, aborted their intervention,’ it urged.

 

He stressed the need for government to look critically into the law that abolishes illegal refineries.

 

He said: ‘NACCIMA believes if these illegal refineries are made legal and is effectively done, it would boost local supply capacity of petroleum products, create jobs and invariably may also reduce prices when competition fully takes its course.

 

‘We have watched with dismay the continuous destruction of small refineries classified by government as illegal in the country. We believe that the action of government/Ministry of Petroleum Resources is not the best given the current problem confronting the country in the petroleum sector; as it would further compound the sector’s supply chain of petroleum products. To ensure strict compliance and standards with the laid down criteria by the operators of the small (but now legal) refineries, there is the need for the DPR to assume effective supervisory role,’ he said. (Guardian)

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Organiser unveils speakers, panelists for the 2024 Industry Summit

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The organiser of the Industry Summit, an annual gathering for professionals and experts in brand marketing, finance, sustainability, and entertainment, has announced the speakers for the fifth edition of the summit in Lagos.

 

 

 

The event themed: Sustainable Marketing for Growth would feature the marketing director of Nigerian Breweries Plc, Mr. Emmanuel Oriakhi as keynote speaker while the head of unit, sustainability at Access Bank, Mrs. Omobolanle Victor-Laniyan and manager brand, strategy & communications at Stanbic IBTC, Ms. Rita Akao would feature as guest speakers.

 

 

 

The summit, which is scheduled to hold on Friday, May 3rd, 2024 at the Marcelina’s Place Ikeja GRA, Lagos would feature some exhilarating panel sessions with some of the contemporary professionals in the Nigerian brand and marketing industry.

 

 

 

The panelists include; Ms. Chioma Mbanugo, Head of Marketing PZWILMAR, Mr. Abiodun Coker, Team Member Media, UBA, Mrs. Mabel Adeteye, Head, Brand & Marketing Communications, Wema Bank PLC, Mr. Kevin Olumese, Marketing Communications Specialist, and Mr. Adeola Kayode, Head, Brands & Creative Services, 9mobile Nigeria.

 

 

 

Others who have confirmed participation are Ms. Aisha Anaekwe, Head, Brands & Comms, Coronation Group, Mrs. Victoria N’dee Uwadoka, Public Relations, Public Affairs & Sustainability Lead, Nestle Nigeria Plc, Mr. Samson Adeoye, Public Relations Manager, Airtel Nigeria, Mrs. Oluwatosin Odiagbe, Marketing Manager, Simba Solar and Ms. Arinola Shobande, Head of Marketing, Showmax.

 

 

 

While Oriakhi would be speaking to the topic, ““New Age Marketing – Catalyzing Transformation Through Value Chain Innovation, Technology, Analytics & Sustainability”, Victor-Laniyan and Akao would present papers on the topics; “Aligning organizational objectives with sustainable marketing for the good of the people, society and business, and “Reimagining Sustainable Growth Through Green Marketing” respectively.

 

 

 

In the press statement signed by the Publisher of The Industry Newspaper/Convener of The Industry Summit/Awards (TIES), Mr. Goddie Ofose, he said that “The 5th edition of the Industry Summit is focusing on sustainable marketing, which is a purpose-driven practice that works to orientate businesses, brands and society towards a sustainable future, influencing appropriate awareness, aspiration, adoption and action across economic and sociocultural systems by taking necessary accountability for its impacts and opportunities.”

 

 

 

“In today’s ever-evolving world, debating whether to incorporate sustainability into business strategy is no longer an option. Considering a values-driven approach when developing business strategies can be vital to long-term success” he said.

 

 

 

Therefore, we have carefully selected these professionals and experts to deliberate on the subject matter, highlight challenges and proffer solutions where private and public sectors could take lessons from and improve upon whatever they have been doing,’ Ofose added.

 

 

 

The Industry Summit/Awards is a brainchild of The Industry Newspaper Limited, publishers of The Industry Newspaper (theindustry.ng) and 789marketing.ng.

 

 

 

The summit is designed to bring together industry leaders across the continent in all sectors in the quest to rev up conversations that will move the Nigeria business, economy and communication industry forward.

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IBEDC records 1,459 energy theft cases in January, February

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The Ibadan Electricity Distribution Company said it has recorded 1,459 cases of energy theft by its subscribers between January and February 2024.

This was disclosed in a press statement signed by the firm’s Chief Key Accounts Officer, Mr. Johnson Tinuoye, on Tuesday.

IBEDC added that it is actively pursuing investigations and legal actions against individuals and businesses involved in the theft in collaboration with the Federal Government Special Investigation and Prosecution Task Force on Electricity Offences.

Identifying the cases, IBEDC said they included various offences such as meter bypass and illegal meter tampering, which resulted in significant financial losses amounting to hundreds of millions of naira for the company.

The statement read, “We want to send a clear message to our customers that energy theft will not be tolerated. Our collaboration with the Federal Government Special Investigation and Prosecution Task Force on Electricity Offences underscores our commitment to ensuring a fair and just electricity distribution system.

“Energy theft not only undermines the integrity of our operations but also deprives IBEDC of the revenue necessary to provide quality services to our customers.”

Tinuoye emphasised that under the Electricity Act, energy theft is now recognised as a criminal offense, carrying severe penalties including imprisonment stressing, “In the Osun region, two individuals were apprehended for stealing energy through meter bypass and illegal connections. Their cases have been formally charged in court for prosecution.”

IBEDC further urged customers to refrain from engaging in any form of energy theft, emphasising that the consequences can be severe, as there is no room for negotiation with the SIPTEO Task Force team, which is actively patrolling and investigating instances of energy theft for prosecution.

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Copyright Breach: NCC Drags MTN, Others To Court Over Musician’s Works

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The Nigerian Copyright Commission (NCC) has filed criminal charges against MTN Nigeria Communications Ltd. and four others over alleged copyright infringement.

The charge with number FHC/ABJ/CR/111/2024 filed in the Abuja Division of the Federal High Court was obtained by journalists on Monday.

News Agency of Nigeria (NAN) reported that the four other defendants in the case include the chief executive officer of MTN Nigeria, Karl Toriola; Nkeakam Abhulimen, Fun Mobile Ltd.; and Yahaya Maibe.

In the three-count charge, NCC alleged that the defendants, between 2010 and 2017, “offered for sale, sold and traded for business’’, infringed the musical works of an artiste, Maleke Idowu Moye, without his consent and authorisation.

The commission alleged that the defendants used musical works and sound recordings of Mr Maleke with subsisting copyright as caller ringback tunes without the authorisation of the artiste.

The musician’s musical works and sound recordings allegedly infringed upon included 911, Minimini-wanawana, Stop Racism, Ewole, 911 instrumental, Radio, Low Waist, and No Bother.

The defendants were also alleged to have distributed the musical works to their subscribers without authorisation, thereby infringing on the rights of the artiste.

In the third count, the defendants were alleged to have in their possession, other than for their private or domestic use, the artiste’s musical works and sound recordings.

According to NCC, the alleged offences are contrary to and punishable under section 20 (2) (a) (b) and (c) of the Copyright Act, Cap. C28, Laws of the Federation of Nigeria, 2004.

The case has yet to be assigned to any judge, and no date has been fixed for the mention.

Meanwhile, no official statement has been released by any of the defendants as at the time of filing this report, while all efforts to get reactions from MTN by New Telegraph proved abortive.

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