The petrol scarcity issues we face in Nigeria are due to our limited refinery capacity. Previous government-sponsored refinery projects have all failed due to corruption in the system. The obvious solution is for people in the the [I]private sector[/I] to finance and run refineries.

You know what? 18 private refineries have been apprived for construction! They are represented by the Association of Private Petroleum Refinery Owners of Nigeria, some of whose officials are:[list][li]Justice Omotunde Ilori, Chairman[/li][li]Mr Isaac Boro, Secretary[/li][/list]Those 2 officers of the association, along with Professor Anya O Anya, (Chairman, NSP Refineries and Oil Services Ltd, one of the approved refinery owners), recently prsented a status report to President Olusegun Obasanjo at the State House in Abuja. [MORE INFO]

If you know something else about this issue of private refineries, please feel free to update this thread. I think it's a positive development. However, for fuel prices to come down, Government needs to license so many private refineries that demand will exceed supply, forcing prices down and making the exportation of petrol and other petroleum products by Nigeria a real income earner.

Here are more quotes from the news:
"As part of the government’s efforts at liberalising the downstream sector of the oil industry, indigenous firms working with foreign partners were also given the opportunity to establish and operate private refineries. 31 companies applied out of which 18 were successful." Source

"Government announced on Friday 12 March that it has approved the commencement of construction work on a private refinery to be undertaken by Orient Petroleum Resources Limited.

"The Presidential Adviser on Petroleum and Energy, Dr Edmund Daukoru, said in Abuja that the approval was given after the company submitted a basic design package and paid the mandatory $50,000 stipulated by government.

"A statement from the Ministry of Petroleum said however, that the company would still pay another sum of $100,000 on completion of construction work on the refinery before it begins production of refined petroleum products.

"The Department of Petroleum Resources in May 2002 short-listed 18 companies, including Orient Petroleum Resources Ltd, which were subsequently granted preliminary license to establish private refineries.

"Dr Daukoru said that three other companies out the 18 have qualified to have their papers processed for presidential approval." Source

Hello Seun,

First of all, I'd like to say "well done" on kicking this site off. I've noticed that despite the near ubiquity of cybercafes in Nigeria and the love that Nigerians have for discussing stuff, there doesn't seem to be a forum which Nigerians resident in Nigeria visit to share their views - hopefully, yours will become that forum.

Regarding the establishment of private Nigerian refineries, I don't know if you've seen this article, from the Daily Champion website:

‘Why private refineries are delayed’

SOPURUCHI ONWUKA

DEPARTMENT of Petroleum Resources (DPR) has attributed the reluctance of investors to fund the establishment of private refineries in the country to government’s continued regulation of the price of premium motor spirit (PMS), also known as petrol.

Its director, Mr. Mac Ofurhie who disclosed this also cited fears that labour unions and civil society organisations would resist hike in the price of fuel emanating from full deregulation of downstream oil sector as another disincentive to such investment.

Government had given 18 licences to companies last year to establish private refineries as part of measures to make petroleum products readily available and deregulate the downstream oil sector.

But the prospective owners of the refineries are yet to construct any following difficulty in securing foreign bank loans and investors for the planned projects.

Speaking in an exclusive interview with Daily Champion in Lagos, Mr. Ofurhie said most of the licencee are afraid to execute their plans due to frequent labour and civil society protests against price movements in the downstream fuel market.

DPR is the official regulatory organ of the federal government in the oil and gas sector which also issued the licences for 18 private refineries.

Mr. Ofurhie said it would be difficult to take investment decision in a market environment that is full of pricing uncertainties.

"We are talking of plans that will involve about $1.5 billion dollars or thereabout. Then you count that there is no deregulated regime to enable them sell their products at a reasonable price without the unions and civil society organisations staging disruptive protests. These are part of the things that hinder the investments."

Advocating full deregulation of the market to enable investments in private refining, Mr. Ofurhie said new refineries would pull down prices by reducing cost of production and weeding our cost components associated with importation.

On progress report on the refineries the DPR boss said only one of the 18 licences has actually gone to site while the rest were at different stages of engineering design.

"They have not really come out with a commencement programme," he said.

Emphaising that it was only a fully deregulated market that is needed, the industry regulator said government has floated other incentives like guaranteed crude oil feedstock to encourage the licences.

"I am sure the government is interested in assisting the refineries take off and realised in time to mitigate the problems in the downstream market."

All that is needed, he said, is to deregulate the price of petrol since, he added, other products have attained substantial level of price deregulation.

"So, for it to be deregulated, there is need for government and the unions to agree. What I am sure of is there is need to deregulate in order to ensure the building of new refineries which will eventually the prices of products."

He pointed out that rising international prices of fuel was affecting both the prices and volumes of imported products and urged all stakeholders in the downstream market to reach an agreement soon to achieve the level of stability needed for investments.

The point of the article is that a business man will not put his money where he is not sure of making a profit, and unfortunately, the domestic market is not one where you can make money by selling refined petrol at current prices.

I guess the question comes down to whether Nigerians prefer a cheap product that is scarce, or an expensive product that is plentiful, and which (as in the case of GSM calls) could become cheaper in the longer term.

I kinda support the views of the author of that article. The regulator is in no way independent and therefore cannot protect the rights of the consumers. How can a government department regulate prices fairly without undue interference? We do not even have a petroleum ministry to supervise the activities of the petroleum market.

As long as the government continues to regulate and interfere with the prices of petroleum products, no sane investor would go near it. It is simple logic that an investor's gain is the profit he makes on his investment. How can one invest a large sum of money on a project only to have another person dictate the price to charge for your services. Market forces would determine the prices and the government has no right to interfere.

It is amazing that we produce crude for export and import all the products made out of crude! The decision of the government to allow private investors build refineries is a welcome development but they should be allowed to operate freely on a level playing ground.

Almost can't kill a bird.

I am watching and waiting. Orient seem to be the most serious but again one cannot tell.

Greatpeter:
Almost can't kill a bird.

Which is why you should go and start your own refinery!

What's the point they'll just get blown up by terrorists

terror wetin

It's funny how the terrorists that claim to be fighting for the Niger Deltans are actually just scaring investors away.

Hmm . . . . they were almost a realility in 2005? 6 years later still waiting. Atleast the niger deltans took maters into their own hands.