Push for border-town refinery, a journey to achieve refining sufficiency

Nigeria and Niger Republic enter into a strategic alliance that will see them build refinery at a border town between both countries. HARRISON EDEH writes on the ability of the border-town refinery to address the huge concerns of fuel importation in Nigeria, since Northern Nigeria consumes about 40 percent of imported fuel in the country.

Nigerian and the Nigerien governments are pushing a proposed border town refinery that would specifically assist Nigeria address concerns of attaining self sufficiency in refining locally, meeting local demands while addressing huge sums spent on fuel importation.

With growing concerns of importation of fuel amid dwindling forex scarcity, there is no better time than now for the Nigerian government to ensure refining capacity is met locally.

The Nigerian government seeks to end fuel importation by 2019, and is heavily relying on Dangote’s 650,000 barrels refinery to cut down the huge importation. With the proposed border-town refinery, Nigeria is poised to reduce the huge importation and heavy burden of trucks on Nigerian roads, with attendant negative impact on Apapa with gridlocks.

Nigerian government’s proposed border town refinery with the Nigerien government has been hailed by many industry stakeholders, who believe that the deal when consummated and comes alive, has the capacity to cut down fuel importation into the country to the tune of 40 percent.

Notably, Nigerian government is still struggling with refining of its crude at home, with the three refineries not performing optimally, prompting huge importation of fuel products from the mainly Russia, United States, Japan and some other key European countries.

BusinessDay findings reveal that with the proposed border-town refinery, the bulk of fuel consumption in the Northern Nigeria would be cut down by 40 percent because of the proximity Niger to Nigeria’s Kano, Jigawa, Katsina, Borno, and Gombe.

”Nigeria spends huge money on fuel importation. You are witness to the Apapa gridlock caused measurably by loading of trucks. This Federal Government’s move with the Nigerien government on a border town refinery would lessen huge imports from mostly European and Asian country and encourage our local refining at home,” Kingsley Obiakor, an energy expert told BusinessDay.

Kingsley went further to state that huge amount of money paid by the federal government to bridge the gap of truck movement of lorry load of fuel and even it’s the consequences of pressures on our roads would be highly reduced to ensure refining sufficiency in the country.

“Nigeria has proximity of about 200km linking it to Niger, with states of Jigawa, Katsina, Kano, and Borno also having close links to the border country,which means Nigeria technically could use the pipe linkage of the depot from Kano which is closer to Niger and link up to the neighbouring states in Northern axis, with Kaduna refinery also on course”

Recall, Nigeria and Niger Republic had already cemented agreement of the proposed refinery by signing an agreement to build a hydrocarbon and pipeline refinery to process 150,000 barrels of crude oil per day.

President Mahammadou Buhari of Nigeria and President Muhamamdou Issofou of the Republic of Niger witnessed the signing of the agreement at the new banquette hall of the Presidential Villa, Abuja.

The refinery, which will be the sixth after those of Warri, Kaduna, two in Port Harcourt and the Dangote Petrochemical and refinery, will be private sector driven, according to President Buhari.

The refinery President Buhari gave December 2018 deadline for the submission of the technical reports on details of the project to enable government fast tracts its take off.

Nigeria had set a target of 2019 for stoppage of petroleum products importation, with the current efforts geared towards the accomplishments of that goal.

The project regarded as mutually beneficial to both countries, will see the construction of pipeline that will supply crude oil from the Republic of Niger to the new refinery, to be located in a border town in Katsina State.

The project is also expected to foster the development of small and medium scale industries through backward and forward linkages

Industry experts believe the project will also help to reduce carnage and deterioration on Nigeria roads with the less movement of petroleum products from the existing Nigeria refineries to the far northern parts of the country.

The project is also expected to engender strong socio economic development of the rural areas, especially where the refinery will be located as more social amenities are expected to spring up in the area.

President Buhari at the MoU signing specifically noted, “This project will be private sector driven with the full support of the governments of both countries and I am happy to understand that several expressions of interest (EOI) from prospective investors are already being received.

“In this regard, a Steering Committee has been set up to be chaired by the Nigerian Minister of State for Petroleum Resources and the alternate chair is the Nigerien Minister of Petroleum, to provide strategic leadership, direction and governance oversight for the project.”

Buhari announced that enior level Joint Technical Team headed by Rabiu Suleiman, carefully selected based on competence to develop the implementation roadmap and strategy on both the refinery and pipeline projects.

“It is my expectation that by December 2018, this group will come up with a detailed roadmap and guideline leading to actual execution of the projects.

“The detail roadmap should cover the feasibility studies for both the Refinery and pipeline projects, Security plan, selected consortia of investors for both the Optimal project site, pipeline routes and details refinery and pipeline projects.

On the heels of this development, the Federal Government has confirmed receiving expression of interest from Russian and Turkish investors with additional 14 other upbeat and willing to invest in  Nigeria-Niger joint venture refinery project.

Confirming this development to BusinessDay, Rabiu Sulaiman the special assistant technical to the minister of petroleum resources, Ibeh Kachikwu, who heads the technical committee to the refinery project said, “Niger share a boundary of over a 1000km from Nigeria. From Borno, Katsina, Jigawa, Sokoto, in terms of very large expanse of culture and neighbourhood, there are lots of things both countries share in common.”

Suleiman pointed out further that,” Since the discovery of a billion barrel of oil in Niger incidentally, because of the landlocked nature of Niger is looking for a closest market for its crude which Nigeria naturally offers, given the proximity, since 40 percent of fuel consumption in Nigeria happens in Northern Nigeria.”

Kano in particular provides the highest consumer states outside Lagos; being a commercial city and the distance between Kano and Niger is about 180km distance. Kano is surrounded by Jigawa, Sokoto, Borno and also Gombe, which are neighbouring states, which naturally take their fuel consumption from around Kano.

It would be noted that Nigeria imports 70% of its Petroleum requirements from outside the shores of the country from far away Russia, United States and other European countries, where we could easily do business with our neighbours to cut down massive import cost.

The border town refinery he said presents an opportunity of exploring the advantage of the proximity of about 150km refinery project to cut down on about 40 % consumption in Northern Nigeria which would see Nigeria becoming self-sufficient in Petroleum refining and even becoming net exporter.

“Here comes an opportunity for a billion barrel of crude that is land locked, and here is an opportunity for a large market with proximity to cut down market needs of the Northern Nigeria in petroleum products which hinges around 40%.”

Another opportunity for the Nigerian nation when the border-town refinery comes on stream is huge impact on lessening the burden of truck transportation on Nigeria’s road infrastructure.

Above all, bridging cost mostly born by the Petroleum equalisation fund on behalf of the government as a result of transportation of imported Petroleum products is to be reduced drastically, since the border-town refinery has proximity to key Northern states earlier mentioned that consumer enormous fuel in the country.

Most notably, the Nigerian government said, the equity it is seeking   is something close to the Nigerian LNLG model of partnership, where you have people with the majority share, and controlling share and also having huge influence on the board management and that is why you have robust management there without undue interference by the government. That is why the LNLG is run absolutely like a business venture.

Industry watchers say the government must be determined to see to the completion of the project in record time to enable it meet the target time of fuel importation stoppage in 2019,as well as ensure heavy trucks loads always log jammed in Apapa for fuel loading is lessened with supply cutting down in the North by 40%.