Oil Import: Nigeria to lessen amount to 60 percent by 2018

Minister of State for Petroleum Resources, Dr Ibe Kachikwu has underscored government’s willingness to reduce importation of petroleum products from the current 95 to 60 percent by 2018.This statement was made by the minister at the Rainol 20^th anniversary lecture organized by the company in Lagos.The event which has the theme “The Nigerian Oil and Gas Industry: Opportunities, Challenges and Prospects of the Downstream Sector”, was attended by representative of the minister, GED/COOD, Nigerian National Petroleum Corporation, Mr Ikem ObihThe minister stated that the proposed establishment of modular refineries in the Niger Delta and similar oil investments, would help reduce refined products to 60 percent by 2018.According to him, export of refined products will commence with Dangote Refinery in 2019.“The nation is at the turning point where the downstream industry is more critical than ever and will drive the economy. Currently, the NNPC imports over 95 per cent of petroleum products owing to challenges being faced by marketers in accessing Foreign Exchange.After 20 years in this industry, I have seen the industry go through challenges but regardless of all that, we are optimistic that there are a lot of opportunities in the sector. Going by our plans presently in the industry, our importation of petroleum products will be down to 60 per cent next year and 0 per cent import by 2020. It is achievable as Federal Government has shown a strong will to revamping the refineries coupled with the plan to bring about 20,000 barrels per day from modular refinery set to come on stream,” he remarked.Kachikwu revealed that the country’s refining capacity in the first quarter of this year stood at 10 million barrels of crude oil.According to his revelation, the present figure negates those of 2015 and 2016 which recorded eight million and 24 million barrels as total output for the two years.Former Executive Secretary of Petroleum Products Pricing Regulatory Agency (PPPRA), and Chairman, Board of Advisors, Mr Reginald Stanley encouraged investors to cooperate in order to invest in building a refinery in the country.Stanley upheld that a single investor cannot take up the burden of building a refinery because it presently costs more than 250 million dollars for 20,000 barrels.“Refinery is not going to work with the present structure of management. This is a very tough business and should not be under government management in order to achieve its purpose. Today, refineries are such that you must be extremely efficient, because it’s a tough business and it is only the toughest that will survive, and interested investors in modular refineries should plan well,’’ he stated.In line with this, the Chairman of Depot and Petroleum Products Marketers Association (DAPPMA), Mr Dapo Abiodun recommended a total deregulation of downstream, a decision which must be taken for the development in the industry.“The downstream business is at a verge of shut down over the huge debt log of two billion dollars owed marketers. We need a deregulated downstream to allow market forces drive the industry. Our challenges range from under-optimise facilities, forex as well as policy inconsistency. With the current price of crude oil in the market and the cap price set out by the Federal Government at N145 per litre, it does not encourage importation of petroleum products.As current landing cost of petrol is N160 per litre which makes it impossible for the marketers to continue to import.” He said.Abiodun therefore said full deregulation of the downstream sector will enable the participation of private sector.Dr Gabriel Ogbechie, the Group Managing Director, Rainoil Ltd maintained that the withdrawal of subsidy payment without regulating the sector, is the bane of the downstream sector.“But regardless of that, we are still optimistic that there are a lot of opportunities in the sector for a country of 180 million people moving around by cars. This is the time for us to look at the downstream and factor a way forward,’’ he said.