Page 5 - DMEA Week 42 2021

DMEA COMMENTARY DMEA

development, Devakumar Edwin, the $2bn Based on this approach, the governor antici-
facility’s slate will comprise 77 different grades pates that refined products will become cheaper
of PP with the unit becoming the largest of its in the domestic market.
kind in Africa. Meanwhile, the strength of the currency also
Mechanical completion of the refinery is could be boosted by naira-denominated export
anticipated late this year, with operations pegged sales. Emefiele said: “If we are lucky that what the
to begin in January 2022 ahead of full start-up refinery produces is more than we need locally
later in the year. you will see Nigerian businessmen buying
The unit will have a capacity of 900,000 small vessels to take them to our West African
tonnes per year (tpy) and is expected to generate neighbours to sell to them in naira … This will
an annual turnover of $1.2bn. Emefiele noted increase our volume in naira and help to push it
that Nigeria’s annual consumption of PE and PP into the Economic Community of West African
is just 200,000 tpy, leaving 700,000 tpy available States as a currency.”
for export. In early August, Minister Sylva said that state
oil firm Nigerian National Petroleum Corp.
Refinery backing (NNPC) had received the green light to acquire a
The refinery is expected to come in at a final cost 20% in the refinery project for a total of $2.76bn,
of $17.5bn, with Dangote retaining an equity valuing the total project at around $14bn.
share of around $9bn. Emefiele said that the Speaking ahead of the investment’s sign-
remainder has been contributed by a combina- off, NNPC managing director Mele Kyari said:
tion of foreign banks, local banks and the CBN. “[Dangote] didn’t ask for it. It’s our decision to
“That project is one of Nigeria’s backward take equity. We made this decision three years
integration programmes and we are very proud ago much earlier. It’s not what he wants, but they
it is coming to light and indeed we know that are also aware that they operate in a resource-de-
refineries abroad are already scared because they pendent country. We made a request and it’s the
know the market they will lose because Nigeri- policy of government that we take interest in this
ans will prefer to patronise that than foreign refinery.”
imported refined products where we will save With Nigeria’s entire 445,000 bpd state-
[on] transportation and logistics,” he said. owned refining capacity having been offline
The governor’s comments in March sug- since 2019 and NNPC having failed to carry out
gested that the savings could be as high as 41% full turnaround maintenance (TAM) on any if
if petroleum products were sourced locally and its facilities, there has been widespread concern
purchased in naira. about the company taking a role in the Dangote
“Based on agreement and discussions with unit. However, as Abuja seeks to shake up its
[NNPC] and the oil companies, the Dangote oil and gas industry, the state has a mandatory
Refinery can buy its crude in naira, refine it and option to acquire a share in any private refinery
produce it for Nigerians’ use in naira,” he said. with a capacity of 50,000 bpd or more.
Emefiele added: “That is the element where Such investments will allow NNPC to take
foreign exchange is saved for the country greater control over Nigeria’s mid- and down-
becomes very clear. We are also very optimistic stream, guaranteeing crude offtake and reducing
that by refining this product here in Nigeria, all its exposure to market volatility, thereby poten-
those costs associated with either demurrage tially making it a more attractive investment
from import, costs associated with freight will proposition ahead of a potential initial public
be totally eliminated.” offering (IPO).™

Week 42 21•October•2021 www. NEWSBASE .com P5