Nigeria is currently facing challenges with the limited supply of premium motor spirit (PMS), commonly known as petrol, due to a scarcity of foreign exchange for importation. In light of this, owners of modular refineries are appealing for government intervention to expand their refining capacity and improve the supply of petrol.
The Crude Oil Refinery-owners Association of Nigeria (CORAN), representing the refinery owners, recently met with Senator Heineken Lokpobiri, the minister of state for Petroleum Resources, in Abuja. During the meeting, they proposed the establishment of a Refinery Intervention Fund to support local refineries in increasing their capacity from the current 27,000 barrels per day to approximately 400,000 barrels per day.
Chairman of CORAN, Momoh Jimah Oyarekhua, conveyed their request to the minister during a courtesy visit in Abuja. Additionally, they sought the minister’s assistance in enhancing the supply of crude oil to CORAN members and reducing the fees they pay to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for each liter of product they refine within the country.
Oyarekhua highlighted that the existing modular refineries are facing challenges in accessing crude oil, and even when available, they are required to pay for it in US dollars. He mentioned that they have engaged with the NUPRC (National Upstream and Petroleum Regulatory Commission) on this matter, as it falls under the domestic crude oil supply obligation outlined in the Petroleum Industry Act (PIA). They have shared the production capacity of local refiners with the NUPRC and sought their commitment to fulfilling the domestic crude obligation for all modular refiners. Oyarekhua stated that they have recently requested another meeting with the NUPRC to discuss progress on this issue.
Furthermore, Oyarekhua, who is also the chairman of OPAC Modular Refinery, urged the minister to assist them in obtaining access to crude oil under the domestic crude obligation as mandated by the PIA. This would serve as feedstock for their refineries.
He stated that the absence of concrete guarantees has hindered potential investors who are contemplating financing the operations of modular refineries. He further explained that investors perceive this as a disadvantage and are unwilling to invest.
He argued that relying on a single large refinery is not a viable solution in the present day. Instead, he proposed that Nigeria should establish modular refineries in areas where crude oil is currently abundant, despite the challenges of pipeline vandalism and crude theft. By implementing modular refineries in these clusters, the country can effectively convert crude oil into refined products for the local market, thereby promoting self-sufficiency.
He emphasized the need to increase the number of modular refineries in the region to 40, each with a refining capacity of 10,000 barrels per day. This would enable the refining of a minimum of approximately 400,000 barrels of crude oil in the Niger Delta.
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Regarding high fees, Oyarekhua expressed concern that the cumulative fees of up to N9.80 per liter of AGO or DPK contribute to increased product prices in the market. He clarified that as refiners, their primary objective is to serve the market, not to make products unaffordable for Nigerians. However, the inclusion of these fees results in higher retail prices for consumers. He noted that the Petroleum Industry Act (PIA) does not stipulate that local crude refinery owners should bear these fees, yet they have been receiving letters from the NMDPRA requesting remittance of the fees. He therefore appealed to the minister to intervene and resolve this challenge.
institutions, assured them that the government would also explore avenues to support their efforts. He emphasized the importance of collaboration between the government and private sector in achieving sustainable growth and development in the petroleum industry. Senator Heineken Lokpobiri concluded by expressing his commitment to addressing the concerns raised and finding viable solutions to the challenges faced by the refinery owners.
