Refinery: IheanachoTakes Big Risk

An Oil Refinery

By Bayo Bernard

 

Big player in Nigeria’s Oil and Gas sector Integrated Oil and Gas Limited has rolled out plans for the construction of a 20,000 bpd crude oil refinery in Tomaro Island, Lagos, which experts say will help the federal  government quests  to exit from the comity of fuel importing nations.  The Eko Petrochem and Refining Company Limited is a subsidiary of Genesis/ IOG Group, owned by shipping magnate and former minister of Interior, Capt. Emmanuel Iheanacho.

When completed the project is expected to reduce Nigeria’s dependence on importation of petroleum products from abroad, saving the country huge funds allocated for fuel subsidy by the federal government.  The Eko Refinery was recently awarded $797, 343 industrial Development grant the United States of America, USA Trade Development Agency, to boost its production capacity.

Fuel subsidy to petroleum marketers takes a large chunk of the nation’s annual budget. In 2013, fuel subsidy rose from N300 billion to N1. 9trillion. The President Muhammadu Buhari government on assumption of office had announced plan to discontinue the subsidy regime. In spite of this, marketers are still being paid subsidy by the federal government.

Some oil marketers had recently demanded a whopping two billion dollars (N720 billion) being debt owed by the federal government on importation of petrol products and the accrued interests on bank loans. The Buhari regime is yet to pay the marketers, due to paucity of funds, energy experts say.

As long as huge funds are allocated to the subsidy regime annually, funds will not be available for the development of other sectors.  Agriculture, Education, infrastructure are areas funds needed to committed, therefore, there must be enough political will to move funds away from subsidy payment to these critical areas, according to development experts.

Policy makers in the country should direct efforts to the construction of modular on shore refineries by encouraging investors to push funds to this critical area of national needs. This, according to Iheanacho, will not only save the country huge forex, more on shore jobs will also be created.  The shipping magnate disclosed recently at a forum organized by the Maritime Reporters Association of Nigeria, MARAN, that establishment of modern refineries in the country will also pave way for creation of ancillary industries within the sector, which he says will discourage capital flight.

Another private refinery with over two million refining capacity is currently under construction by the Dangote Group,  as indigenous player in the manufacturing sector of the economy.

The Integrated oil and gas boss is happy about the partnership with the US development agency. Capt Iheanacho during the signing of the agreement with Acting Director, USTDA, Thomas Heady and United States Ambassador to Nigeria, Stuart Symington in Lagos, said the United States government has recognized the importance of modular refinery to the Nigerian economy.

“By delivering this grant ”The US government has demonstrated its commitment to the infrastructure development and economic growth of Nigeria, especially in the area of export of technologies and services that promote the country refining capacity.”

The Genesis/ IOG Group, came up with the project to curb “ the wasteful historical practice whereby the country exclusively sold its crude oil export on an FOB basis and procured its refined products for domestic consumption on a CIF basis,” Capt Iheanacho said.

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