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Senate urges Creation of HoldCos for Modular Refiners

By Gladys Johnson

Chairman, of the Senate Committee on Petroleum (Downstream), Ifeanyi Ubah, has urged the Federal Government to support the creation of holding companies for clusters of modular refineries as a strategy to ending Nigeria’s fuel scarcity.

Mr Ubah, who spoke with journalists on the sidelines of the Offshore Technology Conference (OTC) in Houston, Texas, U.S., on Wednesday, said such a move would expand Nigeria’s domestic refining capacity and ultimately end importation of fuels.

He said: “I am proposing that the government should come up with a very laudable position to stimulate the development of modular refineries that can refine crude oil within the riverine areas and use competent experts to operate them.

“So, the first step on what the government needs to do is to get all the players in the industry as one and match them. You pick players from the North, South, East, and West; from all the geo-political zones, and pull them together.

“Let them hold a stake in a holding company (HoldCo). You can create about 5 to 10 such holding companies and support them with sovereign guarantees to establish modular refineries and produce refined products for Nigerians. This will get us to start owning our own assets. That is what the government can do.

“Once we are able to do that, there will be competition. Some people will start firing on production, some developing filling stations, and different players will take on different aspects of the downstream sectors; others will invest in transportation – trucking and even rail coaches that can take the products from point A to B.

That is how a country can develop.”

According to the lawmakers, the government needs to take a big leap in investing in these modular refineries. “They will grow bigger. We do not need to place the sector on a single operator, nobody does it. Everybody wants to maximize profit, but the only thing that will crash prices is competition.

“We can use between $300 million and $500 million to establish these refineries and the owners can recoup their monies within 5 to 10 years.

“We can use money from the local content fund and other sources to energize these modular refineries. It will make Nigeria self-reliant in refined petroleum products,” he said.

Let them hold a stake in a holding company (HoldCo). You can create about 5 to 10 such holding companies and support them with sovereign guarantees to establish modular refineries and produce refined products for Nigerians.

Government-owned refineries

On the government-owned refineries, Mr. Ubah who is also the Chairman, of the Ad Hoc Committee on Turnaround Maintenance of the Refineries informed us that at least two of the refineries – Port Harcourt and Warri – would be fully operational by the end of 2024.

He said plans have already been put in place to achieve the target, adding that the Kaduna Refinery would also be operational before the end of next year.

“Already, we have set up a technical team to visit the refineries every two weeks to make sure that they work because this is a mandate given to me,” he said.

Regarding crude oil theft, the lawmaker, who also chairs the Joint Committee on Crude Oil Theft, said the Senate would undertake a holistic assessment of all the issues involved.

He continued: “We intend to hold a public hearing within the next few weeks in about nine states of the federation.

“This will enable us to hear from the locals and other stakeholders, including the Nigerian Civil Defense, the Nigerian Army, the Nigerian Navy, the Police, other security agencies, and NNPC Ltd. To tell us about important issues, especially pipeline vandalism and oil theft.

“It is going to be a holistic public hearing. We are working very hard to see that, under my tenure as the joint Chairman, we are going to do something that Nigerians will be very proud of.

“As somebody who has been an operator, and who understands the industry, I know what to do. I just assumed office about three months ago. We are going to advise the government on some of these issues from a legislative perspective.”

Corroborating Mr Ubah’s position, Senate Leader, Opeyemi Bamidele, said the upper legislative chamber is working to ensure that more private sector players are licensed to own and operate refineries to support other smaller ones that are springing up in several parts of the country.

In addition to licensing new refinery operators, he said the Federal Government and Senate are working to ensure that the turnaround of the existing refineries is fully executed.

He said the Senate has gotten assurance from the Nigerian National Petroleum Company (NNPC) Limited that two of its refineries in Warri and Port Harcourt would come on stream before the end of the year, while the Kaduna refinery will become functional before the end of 2025.

 

 

About Gladys Johnson

Gladys Johnson The Publisher/Editor-In-Chief Global Business Drive Phone: +13465619347 Email: info@globalbusinessdrive.com gladysjohnsonmedia@gmail.com gladys@globalbusinessdrive.com globalbusinessdrive@gmail.com

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