The deregulation of the downstream sector of the oil and gas industry in Nigeria will increase investment in the refining business and facilitate exponential growth in the nation’s refining capacity.
This was the submission of the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, at the African Refiners Association (ARA) Week 2020 which held virtually with the theme: “Towards Cleaner Fuels for Cleaner Air.”
A press release by the Group General Manager, Group Public Affairs Division of NNPC, Dr. Kennie Obateru, stated that the GMD delivered a keynote address entitled, “Vision for the Downstream Sector on the Continent,” at the event in which he advocated deeper collaboration among downstream players across the African continent to provide solutions to challenges of substandard fuels.
Mallam Kyari said though the idea of price stabilization which led to the introduction of fuel subsidy in the 1970s was noble, it had grown into a huge financial burden on the nation’s treasury over the years, necessitating its removal in March 2020. He stressed that the move will not only free up much-needed cash to fund infrastructural development, but will also eliminate market distortion, foster competition between operators, get more private sector players to build refineries in the country and promote efficiency across the entire value chain.
He said increasing Africa’s refining capacity as well as quality of fuel required respective refineries to implement sustainable, coordinated pan-African solutions that would meet the target fuel specifications and thus protect the health and wellbeing of African nations and their citizenry.
“It is important to note at this point that the future of our continent does not just lie in our ability to unlock value from our vast natural resources or powering an industrial and economic revolution, but also in our ability to implement proven refining solutions that consider the broader public health implications of our business decisions,” the GMD stated.
He said NNPC was making concerted efforts to carry out holistic rehabilitation of its refineries in Port Harcourt, Warri and Kaduna, noting that it was also collaborating with relevant stakeholders to establish modular and condensate refineries as well as supporting private sector establishment of refineries.
“These projects will be in line with the AFRI standards of AFRI-4 specifications of 50 particles per million for diesel and 150 particles per million for gasoline by 2020, and AFRI-5 specification of 50 particles per million of sulphur in gasoline and diesel by 2030 respectively. Considering that revamp of petroleum products storage depots and associated pipelines is key to optimal operations of the refineries, the Corporation has decided to use a Build, Operate and Transfer (BOT) strategy to restore these facilities using private sector financing,” Mallam Kyari informed.
According to him, this process has progressed significantly as the process of partner selection was ongoing to ensure sustainability of the refineries post rehabilitation.
He noted that Nigeria was intensifying the use of natural gas to ensure lower emissions, adding that natural gas has been identified as the fuel of choice for the future as it has the full credentials to support the achievement of the Sustainable Development Goals (SDGs).
The NNPC helmsman also disclosed that the outlook for the downstream sector both in Nigeria and across the African continent looks bright with attractive market conditions, large market, significant crude distillation capacity additions from various refinery projects, improvement of the distribution network and the use of natural gas.