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Refining, Regulatory Challenges Worry Oil Industry Stakeholders

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  • Refining, Regulatory Challenges Worry Oil Industry Stakeholders

After over 60 years of commercial production of crude oil and gas, the country is still grappling with low refining capacity and continues to depend largely on importation to meet its fuel needs.

Many Nigerians, including industry stakeholders, have over the years lamented the ailing government-owned refineries, which were built between 1965 and 1989.

The refineries, which are located in Port Harcourt, Kaduna and Warri, have a combined installed capacity of 445,000 barrels per day, but have continued to operate far below the installed capacity for many years.

The proposed rehabilitation of the refineries by the current government has suffered delays as the third-party financiers for the project have yet to be announced, more than a year after the Nigerian National Petroleum Corporation said 28 firms had expressed interest in their financing.

The refineries lost N96.34bn in the first nine months of last year, compared to a loss of N95.09bn recorded in the whole of 2017, according to the NNPC.

Kaduna refinery, which only processed crude oil at 4.7 per cent capacity utilisation in January last year, was idle from February to September, 2018.

The Warri refinery was idle in January and September, but processed crude oil in seven other months, while the Port Harcourt refinery was idle in March, July, August and September but processed crude in the other months.

“We just have to look for ways to ensure adequate internal refining. The advantage of internal refining is that we will have sufficient petroleum products. There is no reason why a litre of kerosene or diesel should cost above N200,” a petroleum expert, Mr Bala Zakka, told our correspondent in a telephone interview.

He said the country had been relying on fuel imports for many years, adding that adequate domestic refining would help the country free itself from foreign currency pressure.

“The pressure on our external reserves will also be minimised,” he added.

According to Zakka, the global oil and gas industry is becoming highly competitive, and energy demand is increasing with nations now coming up with innovative ways of making sure they reduce their dependence on other countries for their sources of energy.

He said, “The United States is looking for innovative ways to make sure they take advantage of their shale oil and make it suitable for refineries. Asian countries like China and India are thinking in the same direction.

“So, for Nigeria, what is going to happen is that there is going to be much less demand for the Nigerian crude oil, and global demand may even go down because countries are looking inwards for innovative sources of energy apart from the other sources of energy that we call renewable energy.”

An energy analyst and Partner at Bloomfield Law Practice, Mr Ayodele Oni, also noted that despite the abundant oil and gas reserves in the country, “we are not doing enough in terms of value addition in the country.”

He said, “A major worry for me is the uncertainty created by the non-passage of the Petroleum Industry Bill. It is important government says it is not passing any new law for another five years than for the uncertainty to exist.

“Most times, investments in the oil and gas industry are long-term projects. So, if the rules change midway, it can be a big problem. I think it is better to have harsh laws with certainty and consistency than to have uncertainty and inconsistency because businesspeople plan on the basis of laws and policies.”

A key obstacle to the growth of the industry has been widely described as the regulatory uncertainty caused by the delay in the passage of the PIB.

The PIB, which has been in the works since 2008 when it was first introduced to the legislature, suffered setbacks in the 6th and 7th National Assembly.

The bill seeks to change the organisational structure and fiscal terms governing the industry.

Currently, before the 8th National Assembly, it was split into four parts — Petroleum Industry Governance Bill, Petroleum Industry Administration Bill, Petroleum Industry Fiscal Bill and Petroleum Host Community Bill — to fast-track its passage into law.

The Senate on May 25, 2017, passed the PIGB, which seeks to unbundle the NNPC and merged its subsidiaries into an entity.

After its passage by both the Senate and the House of Representatives, the PIGB was transmitted to President Muhammadu Buhari for assent in July last year to enable it to become law but it emerged in August that Buhari declined to assent to it.

The Senior Special Assistant to the President on National Assembly Matters (Senate), Ita Enang, identified the provision of the PIGB permitting the Petroleum Regulatory Commission to retain as much as 10 per cent of the revenue generated as one of the reasons Buhari declined to assent to the bill.

A former President of the International Association for Energy Economics, Prof. Wumi Iledare, stressed the need to address the uncertainty surrounding the industry’s governance and institutional framework.

“We all thought the PIGB would be passed but it wasn’t. I think if we want 2019 to start on a good note for the industry, we need to remove the cloud of this uncertainty with respect to the governance of the industry,” he told our correspondent.

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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FG Reopens Osubi Airport Warri for Daylight Operations

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FG Reopens Osubi Airport Warri for Daylight Operations

The Federal Government on Monday said the Osubi Airport in Warri has been reopened for daylight operations.

The Minister of Aviation, Hadi Siriki, disclosed this in a tweet.

The airport was closed in February 2020 over mismanagement and debt allegation involving aviation service providers and airport management.

However, Oberuakpefe Afe, a lawmaker representing Okpe/Sapeie/vaie federal constituency, recently moved a motion for the Federal Government through the ministry of aviation and relevant authorities to reopen the airport for flight operations.

On Monday, Hadi Siriki said “I have just approved the reopening of Osubi Airport Warri, for daylight operations in VFR conditions, subject to all procedures, practices and protocols, including COVID-19, strictly being observed. There will not be need for local approvals henceforth.

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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

JR Firms, an agribusiness firm with headquarters in Nigeria, has announced partnership with Sanit Wing Rwanda through the acquisition of 11 per cent stake in the company.

The CEO of the company, Mr Rotimi Olawale, explained in a statement that the partnership was in furtherance of its goals to ensure food security, create decent jobs and raise the next generation of agrarian leaders in Africa.

The stake was acquired through Green Agribusiness Fund, an initiative of JR Farms designed to invest in youth-led agribusinesses across Africa.

Sanit Wing Rwanda is an agro-processing company that processes avocado oil and cosmetics that are natural, quality, affordable, reliable and viable.

The vision of the company is to become the leading producers of best quality avocado and avocado by-products in Africa by creating value across the avocado value chain.

With focus on bringing together over 20,000 professional Avocado farmers on board and planting of three million avocado trees by 2025 through contract farming, the company currently works with One Acre Fund in supply of avocado to its processing facility.

The products of the company which include avocado oil, skin care (SANTAVO), hair cream and soap are being sold locally and exported to regional market in Kenya.

With the new partnership with JR Farms- the products of the company will enjoy more access to markets focusing on Africa and the European Union by leveraging on partnerships and trade windows available.

Aside funding, the partnership comes with project support in areas of market exposure, capacity building, exposure and other thematic support to grow the business over the next four years.

JR Farms has agribusiness operations in Nigeria, Rwanda, United States and Zambia respectively.

In Nigeria, the company deals in cassava value chain processing cassava to national staple “garri” which is consumed by over 80 million Nigerians on daily basis, while in Rwanda, it works in the coffee value chain with over 4,000 coffee farmers spread across the East Central African country.

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Shut Down Depots Selling Petrol Above Approved Price – Marketers

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Shut Down Depots Selling Petrol Above Approved Price – Marketers

The Federal Government should close down depots that are selling petrol above the approved price, oil marketers said on Thursday.

National President, Independent Petroleum Marketers Association of Nigeria, Sanusi Fari, said the sale of petrol above government approved price by depot owners would soon lead to a hike in the commodity’s pump price.

Fari told journalists in Abuja that the government through its agencies such as the Department of State Services and the Department of Petroleum Resources should curb the development to avoid crisis in the downstream oil sector.

He said some private depot owners were selling at N165 per litre to independent marketers, way above the government stipulated price of N148 per litre.

Fari said, “Our challenge is the inconsistency in the pricing of petrol. Up till a week ago, government was still insisting that the February price for petrol remained unchanged.

“And most of the private depot owners are selling above the government stipulated price. As at today ( February 25, 2021) private depot owners are selling at N165 per litre to independent marketers.”

He added, “In the last six years, only NNPC imports refined products into this country and these tank farms buy their products from NNPC under a controlled price.

“This has affected our businesses seriously because government is insisting that we sell at the rate of N165, which is not going to work.”

The IPMAN president said filling station owners buy the product at N165 per litre from the private depots and incur other expenses such as transportation, rent, etc.

“So government cannot expect us to sell less than what we buy,” he said.

Fari added, “This is why we are calling on government and agencies that are saddled with the responsibility to control petrol pricing to urgently clamp down on depots that are selling above the stipulated price.”

The Nigerian National Petroleum Corporation, the country’s sole importer of patrol, recently stated that it never hiked the cost of petrol to depots.

It also enjoined the depot owners to sell the product at the approved rate and called on the DPR to enforce the stipulated price across the depots.

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