Eko Petrochem and Refining Company Limited, another good idea
With all eyes fixed firmly on the 2019 target by Dangote Refinery to deliver on its 650,000 barrels per day (bpd) refinery and petroleum complex, and hence take the nation out of the current cycle of fuel importation, another indigenous firm appears to have taken a leap in the same direction. The firm –Eko Petrochem and Refining Company Limited – last week signed a grant worth $797,343 with the United States Trade and Development Agency (USTDA), for a feasibility study to advance the development and implementation plan for its proposed 20,000 bpd modular refinery in Lagos.
In the words of USTDA’s Acting Director, Thomas Hardy, the grant would “afford US businesses, opportunity to export technologies and services in support of Nigeria’s refining goals”. On his part, the chairman of the firm, Emmanuel Iheanacho, says that the fund will “ensure the timely completion of the proposed development and the attainment of the underlying economic and social impact envisaged”.
The first point about the grant is that it is not a freebie. It is tied to provision of technologies and services –from the donor country. While there are – as far as what the media reported – no guarantees of skills and technology transfer to Nigerians, there is, at least a fair chance that the funds will be judiciously utilised. More than that however is that it affirms what we have said all along – that good, bankable projects would naturally attract the attention of international finance/development agencies. Like the Dangote Refinery project, the coming of Eko Petrochem and Refining Company Limited has – beyond merely putting to lie the myth about local refineries being jinxed – affirmed that it is doable.
Of course, compared with the Old Port Harcourt Refinery (commissioned in 1965) – 60,000bpd; Warri (commissioned in 1978) – 125,000bpd; Kaduna (commissioned in 1979) – 110,000 bpd; and New Port Harcourt (commissioned in 1989) – 150,000, the 20,000 bpd refinery comes across as modest by any standard. What is significant is that it is wholly private sector driven, which – again like the Dangote initiative – underscores the resolve of the private sector to take away the shame of fuel importation by a leading crude oil producer; the annual haemorrhaging of the economy reckoned in billions of dollars in foreign exchange, while pushing to ensure that the country finally optimises the benefits of its vast endowment in hydrocarbons.
Yes, we do not despise the modest effort. In fact, we believe that such relatively compact refineries, including the modular refineries model being proposed for the Niger Delta, have important contributions to make, particularly when it comes to weaning the nation off the current cycle of dependence on imported fuel and in creating jobs. And if we may add, one area less spoken of – the potential to supply the trigger for forward integration, particularly of hydrocarbon derivatives sorely needed in industries and construction, all of which would have been lost were the crude to be exported. The promoters of the refineries therefore deserve every encouragement to help bring them into fruition.
Indeed, there is ample room for many more refineries considering that the combined installed capacity of the four existing but moribund refineries plus the two private refineries under consideration comes to barely 50 percent of our current export quota. In fact, our goal at this time should be to refine a huge chunk of our crude to ensure that our earnings from the product are optimised. With only two out of the one-score plus refinery licences granted by the Federal Government making headway, the situation obviously, cannot be said to bode well for its advertised programme of liberalisation. As we noted in an earlier editorial, the nation did not have to suffer the cyclic fuel price adjustments in what is supposed to be a push towards liberalisation only to have a regime of oligopolistic players enthroned.