News Column

Four Years After Pact With Chinese, Govt's N3.7 Trillion Refineries Project Yet to Take Off

September 1, 2014

Mohammed Shosanya, Usman A. Bello and Chris Eze

Four years after the Federal Government and a Chinese consortium signed an agreement for the construction of three greenfield refineries in Lagos, Balyesa and Kogi states, no construction work has started at the sites of the project, Daily Trust investigation has shown.

The refineries project, which is to cost $23 billion (equivalent N3.7 trillion), was initiated to shore up the nation's petroleum refining capacity that has for decades remained at 445,000 barrels per day.

Nigeria imports almost all its fuel because the existing four refineries are in disrepair and operate below installed capacity.

The Federal Government signed the greenfield refineries project agreement on May 13, 2010 with a completion period of five years.

Based on the terms, 80 percent of the cost is to be funded with a loan provided by China Export Credit Insurance Corporation (SINOSURE) and a consortium of Chinese banks, led by the Industrial and Commercial Bank of China. The Nigerian National Petroleum Corporation (NNPC) is to provide 20 percent of the funding as equity contribution.

A Daily Trust investigation found that no tangible work has been executed at the three project sites, with just a year to the end of the period projected for completing the refineries.

But NNPC said the project was on course, and that the corporation was awaiting a white paper on the report of a task force that reviewed the plan on building the new refineries.

Land compensation

At one of the sites in Lekki area of Lagos, there was no evidence of plan to have a refinery there by next year.

The large expanse of land meant for the project has some demarcation but no concrete structures to show evidence of any serious work.

In Bayelsa State, the land for one of the refineries has been acquired in Otuoke, the hometown of President Goodluck Jonathan, according to local leaders. But no structure has been built since the acquisition of the land.

Secretary, Otuoke Community Development Committee, Pastor Emmanuel Egede, told Daily Trust that the Nigerian Content Development and Monitoring Board visited the site recently and held a meeting with Otuoke people. He said the meeting was on arrangement being made to compensate the land owners, and on how to involve locals in the project.

He said also the NCDMB team gave assurances that work would begin soon.

At Ugbogiri, the refinery site in Kogi State, farmers are still cultivating the land, four years after the project was initiated.

Daily Trust reports that the issue of where to locate the refinery in Kogi State stoked controversy at first. In 2010, then-Governor Ibrahim Idris gave out land at Itobe in Offu local government for the refinery to be located.

But this was later changed to Ebiya-Ugbogiri in Ajaokuta local government.

Our reporter who visited the site at Ugbogiri observed that part of the land is being cultivated by farmers while the remaining portion lays fallow. There is not even a signpost to indicate that this is the proposed location for one of the three new refineries.

Resident of the community, Mr Audu Usman, said since government officials came to see the place nothing has happened there except farming activities.

Farmers who spoke to our reporter said they continued cultivating the land because government appeared not ready to start the project, adding that they were willing to vacate the land when the project is to start.

Another farmer, Isah Muhammed, said they were not yet paid compensation for their land.

For his part, community Chief Yusuf Aka'aba blamed local politics for the initial hiccups on siting of the refinery, saying from the onset it was billed to be located at Ugbogri but was taken to Itobe because of politics.

"We are appealing to the government to do what is right and start the project because if nothing is done there now after election in 2015, it will still go back to politiking again and nothing would be done on it," he added.

'Project on course'

When contacted, the NNPC told Daily Trust that the effort to build the three refineries is still on.

The corporation's spokesman Ohi Alegbe said a National Refineries Special Task Force was set up by the Petroleum Minister on February 6, 2012 with a mandate to seek new ideas and design financial models across the value chain for the building of adequate capacity to meet local demand for petroleum products.

He said the task force was to also design a blueprint for public-private partnerships to build small, medium and large-scale refineries across Nigeria.

"From the terms of reference of the task force as listed above, it would be noted that its work included proposing new ideas and designing investment models for greenfield refineries. This effectively meant that we had to stay action on the greenfield refinery projects to allow the task force complete its work," he said.

"The task force has since submitted its report. What government has done is to set up a white paper committee to review the report and come up with the Federal Government's position and line of action.

"We are still awaiting the white paper report which will give us a clear direction on which direction to proceed with regard to the proposed greenfield refineries and how to go about them. That is the position, that is where we are with the greenfield refinery projects."

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Source: AllAfrica

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