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Expiring Licences Threaten Bid for Nation’s Local Refining

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refineries
  • Expiring Licences Threaten Bid for Nation’s Local Refining

Thirty-two companies granted licences to establish (LTE) and approval to construct (APC) private refineries with a combined capacity of 1.352 million barrels per stream day (mbpsd) in the country may lose their permits as their June 2018 deadline approaches.

Statistics obtained show that the medium- to long-term (18 months to three years and above) permits, granted by the oil and gas industry regulator, Department of Petroleum Resources (DPR), are nearing their terms.

If the licences expire without the coming on stream of the facilities, the country’s quest to attain self-sufficiency in refining petroleum products could be frustrated. The Federal Government hopes to buoy the nation’s refining capacity through these private refineries, as the existing ones remain largely under-utilised, with an average monthly capacity put at 28.10 per cent as at February end, according to official data.

The coming on stream of these facilities is geared at drastically reducing the huge capital flight to fuel importation, while also meeting local demand and possible exports.

The nation’s existing refineries – Port Harcourt 1 and 2, Warri and Kaduna, all operated by the Nigerian National Petroleum Corporation (NNPC) and Niger Delta Petroleum Resources Limited have a combined capacity of 446,000bpd – but grossly inadequate to meet national daily demand.

Of the 32 licences issued between December 2007 and June 2016, only five have progressed to the APC stage. The other 27 are at the LTEs level while 23 others are yet to commence work.

Amakpe International Refinery, with the oldest revalidated licence (ATC December 2007), is among the old batch of licensees that got stuck due to funding challenges.

If the licences expire, history might well be repeating itself as it was in 2002 when DPR granted 21 LTE permits with an 18-month tenor to private companies which never yielded result largely due to financial and feedstock (crude supply) issues.

The LTE is the first stage of the permit, which progresses to APC after satisfying all the terms. “Under the terms, the LTE and APC are valid for a period of 24 months, but are subject to renewal based on the level of work done,” according to the DPR.

The regulator admitted that the licensees were mostly challenged by funding given the precarious foreign exchange situation in the country. But it insisted that there would be no feedstock guarantee for any investor.

The agency went on: “The refineries will source for their own crude. They can buy from the international oil companies (IOCs) or marginal fields operators (MFOs) at prevailing international market prices.”

The investigation revealed that some of the investors would not rely only on domestic crude as they might import oil from Angola, Gabon, Liberia, Middle East and some South American nations.

For instance, investors in the Dangote Oil Refinery Company, whose LTE was granted in September 2014 with actual capacity template of 500,000bpd, have promised to deliver the project in the last quarter of 2019.

Though the licence expires this September, work has progressed to the Front End Engineering Design (FEED), indicating that it might be renewed for an onward progression to the APC.

The Group Executive Director of Dangote Industries Limited, Devakumar Edwin, who is overseeing the construction, said that operations would commence on the promised date.

He disclosed that the facility, often quoted to have 650,000 bpd capacity, expects no problem with feedstock, as it would source content from crude terminals instead of specific oil fields.

Edwin continued: “So the location of oil wells and their reducibility have no relevance to crude supply to the refinery.

“Dangote Oil Refinery is designed to use various grades/blends of crude just as a means of ensuring flexibility should Nigerian crude be disrupted. However, normally there should be sufficient Nigerian crude to meet the refinery’s needs.”

In a copy of the Final Environmental and Social Impact Assessment report, the company said the proximity of the Lagos Free Zone (LFZ) to new oil and gas deposits was instrumental to its siting.

The company, according to the document submitted to the Federal Ministry of Environment, further confirmed the sources of its crude.

“This crude oil shall be transported to the refinery by marine tankers. Berths for these crude oil marine tankers shall be situated along the refinery’s terminal, which shall be located on the coast of the Atlantic Ocean. At the marine terminal, the cargo of crude oil is discharged through pipelines to storage tanks in the refinery,” it added.

Expressing concerns over crude supply to the private refineries, the Head, Energy Research, Ecobank Plc, Dolapo Oni, noted: “The refineries must be adequately supplied with crude oil. This is another challenge I think the Dangote Refinery would face except it sources its own crude from abroad, without relying on Nigerian crude.”

Oni also decried the under-utilisation of the existing refineries, which he described, as so badly managed and operating at below 50 per cent capacity for many years.

The Deputy Director, Emerald Energy Institute, University of Port Harcourt, Prof. Chijioke Nwaozuzu, suspects that based on its location, the project was positioned more for export. “The location of the refinery is close to the Atlantic Ocean, which would suggest that as part of contingency plans, they intend to use the ocean for crude oil deliveries as well as refined products export.”

To avoid a repeat of the past ugly incident, Nwaozuzu urged government to divest some of its equities in the IOCs JVs for the private refineries.

“An ingenious way by which government could provide Dangote Refinery and others with crude feedstock would be to sell some of the JVs percentage holding with the IOCs.

“Since government owned 55 to 60 per cent interests in the JVs, it could offload up to 15 to 20 per cent to the private refineries.”

This, he noted, would ensure the security of supplies of feedstock to the refineries. “Government will also generate significant revenues, which, if spent wisely, could enable Nigeria to come out of economic recession and stagflation,” he added.

But the Chief Operating Officer, Gas and Power, NNPC, Saidu Mohammed, saw no big deal in feedstock guarantees. He cited several countries that are big refiners of petroleum products but do not produce crude oil.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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PwC to Add 100,000 Jobs in $12 Billion Strategic Revamp

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Price Waterhouse Coopers - Investors King

PricewaterhouseCoopers LLP is investing $12 billion across its global business in an overhaul targeting better audits, digitization of services and greener operations.

The professional-services provider will hire 100,000 employees and develop the skills of existing staff over the next five years as it seeks to respond to the post-pandemic operating environment, it said in an emailed statement on Tuesday.

“We will continue to evolve our ways of working, and expand our capabilities in the areas that matter most for the future, while remaining steadfast in our commitment to quality,” PwC Chairman Bob Moritz said. “We want our people to be the most sought after in the market.”

Auditors are grappling with managing quality amid a shift in ways of working introduced by the Covid-19 pandemic. The International Auditing and Assurance Standards Board has revised standards for auditors, coming into effect in 2022, to boost technology use, help manage new risks, and improve quality management.

PwC is also seeking ways to address growing calls for transparency in the profession from stakeholders after several accounting scandals among the Big Four auditing firms knocked public trust. In South Africa, for example, KPMG has put in place a variety of reforms after it came under fire in 2017 for work done for a politically connected family accused of plundering the government’s coffers.

The South African unit of PwC will add at least 2,500 new employees over the next five years, Chief Executive Officer in the region Dion Shango told reporters in a conference call. Across Africa, where it has a presence in 34 countries, the firm plans to bulk up its operations with a $400 million investment. The company is also interviewing for non-executive directors to strengthen audit oversight.

PwC has also set aside $3 billion of its total global investment to help double the scale of its Asia-Pacific operations, it said. The firm’s spending will also focus on responding to environmental, social and governance trends across its operations.

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African Development Bank Group Appoints Dr. Beth Dunford as Vice President, Agriculture, Human and Social Development

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African Development Bank - Investors King

The African Development Bank Group is pleased to announce the appointment of Dr. Beth Dunford as Vice President, Agriculture, Human and Social Development, effective 1st July 2021.

Dr. Dunford, a national of the United States of America, brings extensive experience to this role. She has held senior level leadership positions in the US government, where she managed large and complex programs, working with the private sector, civil society, and multilateral and bilateral institutions, as well as with African governments, to deliver agricultural, social and human development impact at scale.

Prior to her appointment, Dunford worked as the Assistant to the Administrator in the U.S. Agency for International Development’s (USAID’s) Bureau for Resilience and Food Security, as well as the Deputy Coordinator for Development for Feed the Future, the U.S. government’s global hunger and food security initiative. In this dual role, she coordinated Feed the Future across multiple U.S. government agencies, oversaw a $1 billion annual budget and leveraged millions of direct private sector investment annually. In this capacity, she also coordinated a $2.3 billion Feed the Future presidential initiative across 11 U.S. government agencies and forged partnerships within the private sector and civil society targeted at reducing hunger and poverty. She also led USAID’s technical and regional expertise focused on improving agriculture-led growth, resilience, nutrition and water security, sanitation and hygiene.

A career member of the senior foreign service at USAID, Dunford previously served as Director of USAID’s Mission in Nepal, leading the U.S. government’s health, education, agriculture and environment programs as well as its contribution to Nepal’s massive earthquake recovery and reconstruction effort. She also worked in Afghanistan as Agriculture and Alternative Livelihoods Program Director, USAID/Afghanistan, where she directed agriculture, resilience and emergency food assistance programs.

Dunford has also served in Ethiopia as Director, Office of Assets and Livelihoods, USAID/Ethiopia, where she led government officials, scholars, donors and NGOs, to craft the program, now a model used worldwide to map how emergency and development operations can collaborate to build communities’ resilience to recurrent crises.Dunford also held a number of roles in Washington, including Deputy Assistant to the Administrator in the Bureau for Food Security and Senior Development Advisor to the Secretary of State’s Special Representative to Afghanistan and Pakistan. Dr. Dunford also worked as Senior Policy Advisor, Office of the Chief Operating Officer and as Regional Development Advisor, East Africa, USAID/Washington.

Commenting on her appointment, Dunford said: “I am excited to join the African Development Bank Group and be part of the senior management team. I am passionate about the Bank’s development agenda that has attracted global attention as bold and innovative for accelerating Africa’s development. I am honored to be part of the team to further achieve social and economic transformation on the continent”.

President of the African Development Bank, Dr. Akinwumi A. Adesina said, “I am delighted to appoint Dr. Beth Dunford as Vice President to lead the Bank’s work on Agriculture, Human and Social Development. Beth is a strategic and effective leader with deep knowledge and impressive track record in designing and delivering highly impactful large-scale programs that have helped in lifting 27 million people out of poverty in 36 countries. With over 20 years experience working and delivering programs globally with a focus in Africa, she brings hands-on leadership and drive that will further accelerate our work to deliver greater development impacts”.

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Europe Raises 20 Unicorns This Year Including Crypto Companies

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Unicorn- Investors Kings

This year alone, 23 companies in Europe and Israel have become unicorns (startup companies valued at over $1 billion), beating last year’s total of eight, according to a report by financial data and software firm Pitchbook.

European startups have managed to attract a staggering €32.5 billion (around $39.3 billion) since the beginning of 2021. This year’s capital inflow could easily surpass the €37.6 billion raised in the whole of 2020.

Of the total, 20 companies are based in Europe, including several crypto startups. The U.K. accounts for most of these unicorns, with London-headquartered Blockchain.com currently valued at $5.2 billion after securing $420 million in two funding rounds earlier this year.

Germany is next with digital wealth manager Scalable Capital, valued last week at $1.4 billion after raising over $180 million in a round led by Chinese tech giant Tencent. French crypto security startup Ledger became the latest to join the bunch with $380 million in new funding last week.

The Old Continent is now home to almost 12% of the world’s unicorns with over 50 active companies, the published data revealed. The capital attracted by these entities has continuously grown over the past five years and the 2021 total is expected to reach a record high.

The term unicorn, used to describe startups valued at over $1 billion, was coined by venture capitalist and angel investor Aileen Lee in 2013. It alludes to the rarity of such successful ventures.

European decacorns, or companies worth over $10 billion, have also performed quite well this year. Swedish fintech startup Klarna, for example, was valued at $31 billion in March, becoming the continent’s most valuable VC-backed firm. Klarna was leading the board already in September 2020, at $15 billion, but was replaced by Checkout.com in January of this year, when the online payments company gained a $15 billion valuation, Pitchbook detailed.

According to the authors of the report, the growing participation of U.S. investors has been a major factor in the investment increase in Europe. Almost half of the unicorns’ top 10 backers, such as Accel and Insight Partners, are based across the pond. Pitchbook also emphasized:

U.S. firms have been actively targeting Europe’s tech startups, which tend to have lower valuations than their U.S. counterparts, offering more opportunities for higher growth rates.

The financial data firm believes that the effects of robust investment into unicorns based in Europe could create even larger valuations in the future. “We expect transatlantic capital flows to continue to increase and strengthen valuations in Europe, as cash-rich U.S. investors seek new companies showing the strong potential that could be introduced to the U.S. market,” said Nalin Patel, a private capital analyst at Pitchbook.

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