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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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HOW ACCESS BANK STRUGGLES TO ATTRACT FRENCH COMPANIES…

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Nigerian Access Bank has been very outspoken about strengthening ties with France, but has not yet made much progress.

On the 10th floor of the Access Tower on Victoria Island in Lagos, the only sign that Access Bank has what it calls a “French Desk” is a tiny French flag in a corner. It has been nearly four months since the bank’s main shareholder and non-executive director, Herbert Wigwe, opened the Desk, but it has not yet done anything.

The Desk has been set up to help French companies work in Nigeria and vice versa. To this end, a partnership with the Business France office in Lagos is currently being finalised. However, its efforts will first focus on Ghana. Access Bank’s branch in Accra handles accounts for several major French companies, including TotalEnergies and the consultancy Mazars.

Presence in Paris

In May, Minister Delegate for Development, Francophonie and International Partnerships Chrysoula Zacharopoulou attended the inauguration of the new French Desk, intended to mark a new step forward in Access Bank’s French strategy. Two weeks before, on 15 May, Wigwe became chairman of the French-Nigeria Business Council, replacing Abdulsamad Rabiu of BUA and then inaugurated a Paris branch at the Petit Palais with French Foreign Trade Minister Olivier Becht in attendance

Like the French Desk in Lagos, the Paris office, a branch of Access Bank’s London and run by Justin Maria, cannot do much. It currently cannot open an account for any clients, discussions are still on going with the French Prudential Supervision and Resolution Authority.

 

Westward bound

The Paris branch of Access Bank and the French Desk in Lagos, which will also benefit from an office in Paris in the coming months, indicate its interest in the West African Economic and Monetary Union. The Nigerian bank acquired Standard Chartered Bank’s assets in Angola, Cameroon, The Gambia, Tanzania and Sierra Leone, and now intends to break into the markets in Senegal and Ivory Coast.

 

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Businesses to enjoy more value with Glo Prime

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A new offer, Glo Prime, has been unveiled by Digital and telecommunications solutions provider, Globacom. It comes with a portfolio of call and data package aimed at aiding the growth of businesses by keeping them connected at all times and ensuring they get more value for the money they spend on the network.

 

The product, according to a Globacom statement, comes in four different plans with each of them delivering immense value to the businesses and other customers. The plans includeN1,500, N3,000, N5,000 and N10,000 packages.

 

Customer who chose Prime N1,500 pack will get 45 minutes of calls and  4GB of data, while those who prefer the Prime N3,000 plan will enjoy 100 minutes of calls and 12GB of data. Those who opt for Prime N5,000 pack will get 300 minutes of calls and 25GB data while 750 minutes of calls and a whopping 60GB of data await customers who pick the N10,000 pack.

 

Globacom stated that, “In a highly dynamic environment, there is  need for constant innovation to offer more value to our new and existing customers. The Glo Prime is, therefore, a portfolio of new plans designed to surpass similar products in the market in terms of flexibility, ease of use and value”.

 

It added that the introduction of Glo Prime reinforces the company’s position as a provider of the most competitive Voice and Data solutions for high value customers, both individuals and corporates.

 

The company, which marked its 20th anniversary in August, recently received two awards at the Consumer Value Awards and picked up another two at the prestigious Marketing Edge Annual Brand and Advertising Awards, lending credence to its  commitment to excellent service delivery and innovative offering to subscribers.

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Court halts Aiyedatiwa’s impeachment, kinsmen hold solidarity protest

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The Federal High Court in Abuja, on Tuesday, restrained the Ondo State House of Assembly from impeaching the Deputy Governor, Mr Lucky Aiyedatiwa, over alleged gross misconduct.

Justice Emeka Nwite gave the restraining order in a ruling shortly after Aiyedatiwa’s counsel, Kayode Adewusi, moved an ex parte motion to the effect.

The judge also restrained Governor Rotimi Akeredolu from nominating a new deputy governor and forwarding the same to the lawmakers for approval pending the hearing and determination of the substantive matter.

Justice Nwite held that after listening to Adewusi, he was of the view that the interest of justice would be met by granting the application.

“Therefore, the application of the applicant succeeds,” he held.

The News Agency of Nigeria reports that the embattled deputy governor had, in a motion on notice marked: FHC/ABJ/CS/1294/2023, sued the Inspector-General of Police and the Department of State Services.

Others joined in the suit are Akeredoku, Speaker of the Ondo State House of Assembly, Chief Judge of Ondo State, and the House of Assembly as 1st to 6th respondents, respectively.

In the application filed by Mr Adelanke Akinrata on September 21, Aiyedatiwa sought four reliefs.

Justice Nwite, who granted all the reliefs, adjourned the matter until October 9 for hearing.

Meanwhile, hundreds of indigenes of Ilaje community in the Ilaje Local Government Area of Ondo State, on Tuesday, stormed Akure, the state capital, to protest against the ongoing impeachment process against Aiyedatiwa.

Aiyedatiwa, who is also an Ilaje man, had been served the impeachment notice by the state House of Assembly and was expected to respond to all the allegations in the notice.

The protesters, who gathered in front of the entrance of the Assembly gate with leaves in their hands, chanted various solidarity songs to express their support for the embattled deputy governor.

Some of them carried placards with inscriptions such as “Justice for Lucky, Lucky is innocent”; “Stop accusing him wrongly”; “Ilaje Nation stands with Aiyedatiwa”; “Aketi, Lucky is not your enemy,” and “Let Lucky finish his term,” among several others.

The protesters alleged that the impeachment proceedings were a plot to take Aiyedatiwa out of the race of the 2024 governorship election in the state.

Speaking on the development, one of the leaders of the protesters and Founder of the Ilaje World Congress, Mr Ola Juda, declared that the indigenes of Ilaje would not tolerate the impeachment move against Aiyedatiwa.

He said, “This gathering is the gathering of sons and daughters of Ilaje land; not only Ilaje, but we also have other sympathisers from Akure and Ese-Odo Idanre axis that have come together to protest against injustice and the battle that is going to erupt in Ondo State. The peace of Ondo State is being threatened by the actions of the Ondo State House of Assembly.

“For the past decades, an Ilaje man has never been a deputy governor but for the first time, we have a deputy governor, and yet powers that be have vowed that he will not finish his tenure. Aketi/Lucky mandate was given to both of them and if Aketi is still the governor of Ondo State, our mandate as the deputy governor remains.”

However, no member of the House came out to address the protesters.

The Akure Area Commander of the Ondo State Police Command, Mr Nzota Chidi, who addressed the protesters, advised them to be peaceful in order not to be infiltrated by miscreants.

In a related development, some former members of the Ondo State House of Assembly have condemned the process taken by the state Assembly to impeach the deputy governor.

The former lawmakers, under the auspices of the Concerned All Progressives Congress’ Ex-Lawmakers in Ondo State, said it was too early for the members of the 10th Assembly to take the issue of impeachment as a major priority at the expense of various challenges facing the state in recent times.

Speaking in Akure on Tuesday on behalf of others, a former lawmaker, Mr Abiodun Jerome, urged the state Assembly to play the game according to the rules, warning them against causing chaos in the state.

Jerome said, “Our intention is purely advisory. May we remind you, dear honourables (lawmakers) that Chapter 5 Part 2 and Section 90 to 129 of the Nigerian Constitution is very clear on the establishment of the House of Assembly and its functions.

“The present House of Assembly is less than four months old, and it’s very unfortunate that impeachment proceeding is their priority amongst the myriads of critical issues confronting our state presently.

“As former lawmakers, we have the responsibility to point attention to all forms of abnormalities we observe so that the general public is not misled. Although we could have ordinarily ignored the shenanigans of the orchestrators of the dastardly act, we are compelled by the trust once held by us with the political responsibilities as representatives of our various constituencies.”

Similarly, a political organisation under the aegis of Ondo State Consciousness Movement, on Tuesday, warned members of the Ondo State House of Assembly against being used as a political tool in the hands of the executive to achieve a predetermined objective.

The chairman of OCM, Shalom Olaseni, in a statement, said that the legislature should not allow its hallowed chambers to be tainted with political witch-hunts or targeted vendettas as being rumoured in various quarters in the state.

He said, “The alleged discord between the state governor, Rotimi Akeredolu, who recently returned from a protracted sick leave abroad, and the deputy governor, stemming from the deputy governor’s alleged gubernatorial ambitions, should not be allowed to overshadow the pursuit of justice and adherence to constitutional principles.”

 

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