By Adewale Sanyaolu
Hopes of adequate local refining capacity to augment the high volume of Premium Motor Spirit (PMS) imports appears to fading fast as the Crude Oil Refineries Owners Association of Nigeria ( CORAN) has said the N5.80k per liter charge on refined petrol would make the product expensive.
Chairman of CORAN, Mr. Momah Oyarekhua, stated this during a live interview on Arise Television at the weekend.
Oyarekhua listed the N5.80k charge to include; N1 evacuation charge payable to Nigerian Midstream Downstream Petroleum Regulatory Authourity( NMDPRA),N1 per liter offtakers charge, 0.5 per cent of wholesale price and the recently introduced midstream downstream gas infrastructure charge of 0.5 per cent of wholesale price. All of this when put together comes to N5.80k per liter.
‘’Why should we pay N5.80k upfront. This is just like a toll and this will make the product more expensive. Businesses exist to solve problem. We are willing to speak to government to address some of these challenges to business. Dangote refinery, even though, located in the free trade zone will pay N5.80k per liter on every product. This practice is not sustainable for business survival,’’.
The CORAN boss equally lamented the idea of selling crude oil to local refiners in Dollars remained a disservice to modular refineries investors and doesn’t make sense
“We have advocated that crude needs to be sold to modular refineries in naira because when you process these products, you’re going to sell in naira, you’re selling into the Nigerian market, so our income is in naira. So, the fleet stock should also be in naira so that we don’t come and overcrowd the foreign exchange market.”
“Let’s assumethat you have 40 modular refineries of 10,000 capacity for example, and you have to go into the market to look for an equivalent USD to pay for the crude
“Imagine, for a 10,000 barrel capacity refinery for example that we have, if the average price of crude is $100 just to make it very simple, we are going to require a minimum of $30,000,000 on a monthly basis to procure crude, so what you are going to have is that in a year, we are going to require about $360,000,000. So imagine you have 10 refineries of 10,000 barrels each, that’s going to be $ 3.6 billion that you will require to pay for crude,’’.
He said the issue of oil theft could be addressed if crude oil production by some indigenous and international oil Companies are given to modular refineries because their locations are always sited closer to oil fields.
‘’For instance, in own case at OPAC refinery, we are located closer to Pillar Oil facility which feeds us with 1,500 barrels of oil out of their 5,000 production capacity with a 400 meter pipeline. If they give us all of their production, this would have addressed the issue of oil theft.
He assured that with the coming on stresm of modular refineries, crude oil did not need to be passed through the pipeline, as the crude will be immediately refined and sent into the market, which will drastically reduce oil theft in the country, and reduce the amount of money spent on security for the pipeline.
He, however, urged the President Bola Tinubu, to assist modular refinery owners scale their operations.
The support, he said, would help to alleviate further hardships which may be faced by Nigerians due to the removal of fuel subsidy.
According to him, there was an urgent need for the government to support and enhance the efficiency of the existing modular refineries, with the view to enabling them to effectively refine crude oil in the country in line with their installed capacity.
Oyarekhua said the provision of a special intervention fund was necessary to support and encourage modular refineries in the country to perform and meet their installed capacities.
He argued that refining crude oil in modular refineries is more cost-effective than exporting crude abroad for refining.
He said, “The cost of exporting, refining, and shipping back can be eliminated if the modular refineries become efficient in crude refining in Nigeria because we are mostly situated near to the well-head of crude production which will require little cost.’’