*To waive tax for investors
Oscarline Onwuemenyi
22 February 2018, Sweetcrude, Abuja – The Federal government on Wednesday said it was talking with potential financiers, including the Central Bank of Nigeria (CBN), International Finance Corporation (IFC) and Nigerian Sovereign Investment Authority (NSIA) to provide contributory finance to investors in modular refineries in the Niger Delta region.
He said modular refineries will address concerns of daily growing consumption of Premium Motor Spirit (PMS) and reduce fuel importation.
Speaking at the ongoing Nigeria International Petroleum Summit (NIPS) in Abuja, Engr. Rabiu Suleiman, who is the Senior Technical Adviser to the Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, stated that the government would also guarantee regular crude oil supply to investors in modular refineries in the region.
Suleiman said this would be in addition to tax and custom duties waivers the investors will also enjoy from the government to ensure their projects took off and remained profitable.
Apart from NSIA, CBN, and IFC, Suleiman said the Niger Delta Development Commission (NDDC) and some state governments had equally indicated their willingness to invest in the refineries and gain equity in them.
He said, “On financing, we have engaged the government and the Central Bank; we have engaged the Bank of Industry, we have engaged Sovereign Wealth Fund, and we have engaged Infrastructure Bank. We have engaged a lot of them including the IFC and the rest.
“We have all worked with them and they all promised to make contributory finance into that. Only two weeks ago, we engaged with NDDC, the MD made a commitment that they are going to see how they can put in some money even if it means to pick up an equity either in one or two or three of the refineries.
“State governments have said they want to be part. So, we are encouraging a lot of financing. In the next two weeks, we intend to call for an investors’ engagement forum that will address some of the funding arrangements that we intend to bring on board.”
The federal government in November 2017 disclosed that it was considering granting 13 operational licenses for modular refineries in the Delta region. It also has, as part of its policy to revive the country’s oil sector, the Seven Big Wins, plans to incentivise the construction of modular refineries in the region.
Suleiman, however, explained in his remarks at an executive session titled: Petroleum Products Supply and Demand in Africa – Translating Crude Abundance to Product Abundance, that these were parts of the government’s plans to incentivise modular refining and create jobs in the Niger Delta.
Suleiman said, “Nobody wants to invest a heavy amount of money in places where you are not very sure of doing the business without being interfered in one way or the other. Modular refining is a small ticket business and it has very long impacts.
“We have a lot of programmes that will support modular refining initiative, and a lot of incentives have been put together to support these initiatives, right from customs duty waivers. Anybody who wants to invest in modular refining in the Niger Delta is going to benefit from such custom duty waivers and tax relief that is being discussed at a very senior level and we have reached a very serious level and that is going to happen.”
According to him, “Crude is guaranteed more or less. The crude is for sale, we take it offshore to sell, there is no justification why crude should not be made available to the refiners, in-country. Today we have already issued a letter to one of the proponents of the modular refineries and we directed ExxonMobil to guarantee crude supply to that refinery because they are in close proximity to Mobil in Eket.”
Suleiman further noted plans by the government to grant tax and relief and other waivers to investors in modular refineries to reduce their costs.
“Right from cost duty waivers and tax relief, discussions are advanced already by the government to assist investors in modular refineries and the government is determined to ensure maximum local production of petroleum products in the country,” he said.
”I am the person driving the modular refinery issue in the ministry. Modular refineries have a very long impact. We have teething problems and we are putting up necessary incentives to ensure investors in modular refineries take off smoothly.
“At the Nigerian National Petroleum Corporation (NNPC), we have had an advanced discussion with the federal ministry of finance and the authorities of the Nigerian Customs Service, to support these investors.
“Also, from the modular refineries, there is a lot of market for diesel and we are discussing with the federal ministry of transport on ensuring that the speedboats being used in the Niger Delta get diesel engines.”
Also speaking in the session, Mr. Babajide Soyode, who is the Technical Consultant to the President of Dangote Group, Alhaji Aliko Dangote, explained that claims by the Nigerian National Petroleum Corporation (NNPC) that it was experiencing an under-recovery in its importation and sale of petrol in the country was comical.
Soyode, who questioned the country’s continued regulation of its downstream petroleum sector, explained that under-recovery was synonymous with the subsidy. He thus suggested that the corporation had gone back to subsidising the country’s consumption of petrol.
He also questioned the 445,000 barrels per day (bpd) collective nameplate production capacities of NNPC’s four refineries in Kaduna, Warri and Port Harcourt, adding that the refineries have some irregularities in the capacities of their units.
According to him, 15,000bpd of Warri, 10,000bpd of Kaduna, and 65,000bpd of Port Harcourt were not available, and as such it would be wrong to continue to state that the refineries collectively have a processing capacity of 445,000bpd.