Economy

Crude supply drags as NNPC slows modular refineries’ approval

Published

6 months ago

August 5, 2024

Admin

Operators of modular refineries are facing a major setback as they encounter resistance from the Nigerian National Petroleum Company (NNPC) in a bid to secure alternative crude oil supplies.

Nigeria’s position as Africa’s biggest oil producer should logically confer the benefits of ample supply to its local refiners. However, the reality is starkly different.

Leaked memos and extensive interviews with industry insiders showed the state-owned company is foot-dragging on approvals for modular refineries to seek alternative crude oil supplies.

Modular refineries are simplified refineries with significantly less capital investment than traditionally full-scale refineries.

Insiders said the red tape is a death knell for modular refineries struggling to survive amid funding drought, as foreign investors withhold their money due to a lack of guaranteed crude oil supply.

A leaked memo seen by BusinessDay showed AIPCC Energy Limited, owners and operators of the Edo Refinery and Petrochemicals Company Limited (ERPCL), has faced significant operational hurdles due to the persistent lack of crude oil supply despite being a fully functional 1,000 barrels per stream day crude oil refinery located in Ologbo, Edo State.

The company has existing crude oil supply agreements with Seplat and ND Western since 2022, but bureaucratic bottlenecks have prevented the refinery from accessing the much-needed resource.

ERPCL’s letter addressed to Mele Kyari, group chief executive officer of NNPC, alleged the company has been in constant communication, sending letters and having meetings with the NNPC since 2021.

“On 18th August 2021, our team led by our chairman, met with you and your top management team to discuss our intention to buy crude oil from NNPC and we immediately wrote to the NNPC, seeking crude supply,” the letter dated 22 July 2024 said.

It added, “In July 2022, the representatives of NNPC (from HQ Abuja and NPDC Benin) visited our facility for site inspection and to confirm the mechanical completion of the Edo refinery. In September 2022, we were invited for a commercial negotiation meeting with the NNPC Head of terms, after which we sent a follow-up letter identifying the oil fields from which we can offtake crude oil.

“In March 2022, we also wrote to the Ministry of Petroleum Resources, informing it of our refinery status, future projects and our challenges of lack of crude oil supply to our refinery. We had also written to and had a meeting with the NNPC Exploration and Production Limited (NEPL) between November 2022 and March 2023, indicating our severe need for crude oil supply from oil fields where NEPL has equity stakes.”

ERPCL noted that despite these correspondences and communications with NNPC over the past three years on the issues of crude oil supply, it has succeeded.

ERPCL also has a Crude Oil Supply Agreement with ND Western to lift crude oil from the Ughelli Pumping Station (UPS) owned by NEPL and operated by Shoreline.

“We have held several meetings with Shoreline and Heritage Oil and indicated our readiness to make modifications needed to offtake crude oil from the UPS but no progress has been made till date,” ERPCL.

The owners of ERPCL seek Kyari intervention as group CEO of NNPC for NUIMS to give occurrence to the Seplat-ERPCL agreement to enable Edo refinery to start lifting crude oil from Oil Mining License 53.

They also want Kyari’s intervention for NEPL and shoreline to allow Edo refinery to start lifting ND Western’s crude oil from the Ughelli pumping station.

Nigeria currently boasts 25 licensed modular refineries. Five are operational, producing diesel, kerosene, black oil, and naphtha.

OPAC and Aradel have the highest capacities among the five working refineries at 11,000 and 10,000 bpd respectively, while Duport has the lowest at 2,500 bpd. Edo Refinery and Waltersmith fall in between, with capacities of 1,000 and 5,000 bpd, respectively.

About 10 are in various stages of completion, while the others have only received licences to establish. The rest remains stalled due to the unavailability of crude and other issues.

The CEO of another modular refinery, who pleaded anonymity, stated that modular operators had raised concerns severally in the past that some mafias in the oil sector were bent on stopping in-country refining of crude oil for the production of Premium Motor Spirit, popularly called petrol but received no positive feedback, stressing that the chairman of Dangote Petroleum Refinery just re-echoed it last month.

“No modular refinery has received a barrel from NNPC despite engagement since 2020,” he said.

Eche Idoko, the publicity secretary of Crude Oil Refinery Owners Association of Nigeria (CORAN), advised the federal government to treat indigenous refiners right, given that foreign investments are no longer flowing into the sector.

“In the last eight years, no major foreign investments had been recorded,” Idoko said.

He noted that five CORAN members have completed their refineries.

“The others are having a major challenge. This challenge is that the people who are supposed to finance them have not disbursed financing for construction because they want some level of guarantee,” he said.

“A guarantee that if they finish the refinery, they are going to get feedstock, which, of course, is crude oil,” Idoko said.

Industry experts say the economic impact of this inadequate supply is profound.

BusinessDay findings showed that agriculture and manufacturing, which depend heavily on diesel and other refined products, suffer from high operational costs due to exorbitant fuel prices.

The National Bureau of Statistics (NBS) reported a 20 percent increase in food prices over the past year, a trend directly linked to high diesel costs driven by insufficient local refining capacity.

Moreover, the high cost of diesel, which peaked at N1,800 per litre early this year, places a heavy burden on logistics and transportation, further driving up the cost of goods and services. The coming of the Dangote Petroleum Refinery forced the price to N1,200/litre in April.

Last Monday, the Federal Executive Council (FCE) approved a proposal by President Bola Tinubu directing the NNPC to sell crude oil to Dangote Petroleum Refinery and other modular refineries in naira.

Idoko believes this move will boost domestic refining capacity and ultimately reduce fuel prices for consumers. However, he emphasised the need for concrete actions to back up the announcement.

“Regulatory bodies need to provide detailed guidelines for the policy’s implementation,” Idoko said.

Credit: BusinessDay

Economy

Nigeria secures aircraft financing deal with Afreximbank

Published

2 days ago

January 16, 2025

Naijablitznews

By Francesca Hangeior

A development financing institution, African Export–Import Bank, Afreximbank, has agreed in principle to collaborate with Nigeria on aircraft financing.

Afreximbank, while announcing plans to launch a leasing subsidiary, which will soon take delivery of 25 aircraft to be leased to African airlines, said it will provide Nigerian airlines with access to dry-leased aircraft that would enable them to better service Bilateral Air Service Agreement, BASA, routes and domestic operations.

A statement by Mr Tunde Moshood, special adviser on Media and Communications to the Minister of Aviation and Aerospace Development, Mr Festus Keyamo, said the partnership was achieved during a side meeting held with the Afreximbank team at the four-day Aviation Economic Conference in Dublin, Republic of Ireland.

The statement reads: “A significant milestone in Nigeria’s aviation sector was achieved during a side meeting held with the Afreximbank team at the ongoing Aviation Economic Conference in Dublin, Republic of Ireland. The meeting, facilitated by Boeing’s Senior Director of Finance, Lereece Rose, brought together key stakeholders to discuss aircraft financing opportunities for Nigerian airlines.

“The meeting was attended by the Minister of Aviation and Aerospace Development, Festus Keyamo SAN, who led the Nigerian delegation. The delegation included distinguished members such as the Chairman, Senate Committee on Aviation, Senator Abdulfatai Buhari; Chairman, House Committee on Aviation, Abdullahi Idris Garba, Chairman, Senate Committee on Banking, Insurance, and Other Financial Institutions, Senator Abiru Adetokunbo; Director General of the NCAA, Capt. Chris Najomo; Managing Director of Fidelity Bank, Dr. Nneka Onyeali-Ikpe; COO of Air Peace, Toyin Olajide; CEO of XEJet, Emmanuel Iza; Chairman, ValueJet, Kunle Soname and his Managing Director, Capt. Majekodunmi, and Chairman/CEO of Bellagio Air, Dr. Oludare Akande, among other aviation stakeholders.

“At the meeting, Afreximbank, led by its Director and Global Head of Project and Asset-Based Finance, Helen Brume, agreed in principle to collaborate with Nigeria on aircraft financing. Highlighting the bank’s extensive experience in supporting airlines such as Arik Air, Kenya Airways, and TAG over the past two decades, Brume emphasized the need for robust aviation infrastructure to enhance the competitiveness of African airlines.

“To address this, Afreximbank announced plans to launch a leasing subsidiary, which will soon take delivery of 25 aircraft to be leased to African airlines. This initiative aims to provide Nigerian airlines with access to dry-leased aircraft, enabling them to better service Bilateral Air Service Agreement, BASA, routes and domestic operations.

“Lereece Rose commended the Minister for his efforts in improving Nigeria’s aviation ecosystem, particularly in raising Nigeria’s Cape Town Convention score from 49.5% to 75.5 per cent. This progress underscores the country’s commitment to creating an enabling environment for aircraft financing and leasing.

“The Minister highlighted the critical need for partnerships that would enhance access to aircraft financing for Nigerian operators, facilitating growth and improved service delivery. In response, Afreximbank affirmed its readiness to work with the Nigerian government, signaling a promising future for the country’s aviation industry.

“A committee has been established to follow up on the discussions, ensuring that this partnership materializes into actionable solutions for Nigerian airlines.”

Economy

SEE Dollar (USD) to Naira Black Market Rate Today January 16, 2025 Aboki

Published

3 days ago

January 16, 2025

Naijablitznews

As of January 16, 2025, the Nigerian Naira (NGN) has continued to experience some level of volatility against the US Dollar (USD), while this has been the norm for decades now, this largely to some extent reflects the ongoing economic challenges.

See the Naira performance across various currencies

A quick check at the parallel market at Abuja Zone 4 market,as at January 16, 2025 , the black market exchange rate stands firmly at approximately ₦ 1,663.00 per USD. This means if you want to buy a dollar now, it is ₦ 1,663.00 while if you want to sell it is approximately ₦ 1,652.00 .

Please be aware that the parallel market or the black market rates are mostly and notably higher compared with what you get from the official market or CBN rate

Dollar to Naira (USD to NGN) Black Market Exchange Rate Today

Selling Rate ₦ 1,663.00

Buying Rate ₦ 1,652.00

Economy

Providus Bank Battles E-Settlement Company To Salvage N3.7 Billion Loan

Published

3 days ago

January 16, 2025

Kayode Sanni-Arewa

In a bid to salvage the sum of three billion, seven hundred and forty-three million, one hundred fifty-two thousand, five hundred and nine eighty Naira which was advanced to E- Settlement company, Providus Bank Limited has applied to a federal high court in Lagos urging the court to set aside an order granted the company to convene a meeting of its creditors to pass a scheme of arrangement.

In an affidavit sworn to by the Head, Loan Recovery & Remedial Management of Providus Bank Limited,Olayinka Lawuyi, he avers thus:

Providus Bank is one of the creditors of the E-Settlement Limited with the sum of N3,743,152,598.57 (three billion, seven hundred and forty-three million, one hundred and fifty-two thousand, five hundred and ninety-eight Naira, fifty-seven Kobo)being owed to it by E-Settlement Limited.

The bank provided E-Settlement Limited with an overdraft facility to the tune of N2,600,000,000 (Two Billion and Six hundred Million Naira only) upon its application to enable E-Settlement Limited to rebook its loan balance in order to enable it to repay from its current cash flow realities.

The said facility was due for repayment on 3rd January 2025, as the agreed tenor for the overdraft facility was 365 days.

Further to the paragraphs above, PROVIDUS bank and E-Settlement Limited had already taken steps towards an agreement/compromise with respect to the loan facility, and it is a shock to the bank that while negotiating the terms of a loan restructuring privately with the bank E-Settlement Limited has taken steps to hold a court-ordered meeting of all its creditors.

E-Settlement Limited approached the Court vide an Ex Parte application dated 23rd October 2024, seeking, amongst other things, an order mandating all the creditors of E-Settlement Limited to attend a meeting for the purpose of the E-Settlement Limited, proposing a Scheme of Arrangement and Compromise to all its creditors under Section 715 of the Companies and Allied Matters.

In E-Settlement Limited’s application to the Court, E-Settlement Limited indicated that it is indebted to its creditors in the sum of N12,458,553,150 (twelve billion, four hundred and fifty-eight million, five hundred and fifty-three thousand, one hundred and fifty Naira).

By E-Settlement Limited’s Scheme of Arrangement, it wishes to defray its entire alleged N12, 458,553,150 (twelve billion, four hundred and fifty-eight million, five hundred and fifty-three thousand, one hundred and fifty Naira) with the sum of $2,000,000.00 (Two Million US Dollars), which is to be full and final payment of its alleged indebtedness to all its creditors on a pro-rata basis. E-Settlement Limited stated in its application that it is indebted to the following creditors in the following amount.

Bank of Industry: N452,326,928
Kunoch Limited: N849,896,553
Vale Blue Finance Limited: N309,400,140
VFD Microfinance Bank Limited: N30,000,000
Kuda Microfinance Bank Limited: N1,510,193,217
PROVIDUS BANK Plc: N3,795,837,670
Emirates and Highbury Limited: N4,590,065,330
Advanced Technologies Nigeria Limited: N425,072,322,9
Aza Finance: N8,870,666
Kizento Project: N170,831,000
Salaries: N324,950,000

TOTAL, N12,467,443,826

E-Settlement Limited purposefully and intentionally misrepresented and suppressed several material facts before the Court, which ought to have been openly provided to enable the Court to reach an informed decision on the application.

Mr Lawuyi avers further that as a fact that E-Settlement Limited misrepresented and suppressed material facts from the Court in obtaining the orders:

The fact that E-Settlement Limited is negotiating privately with the Providus bank on a restructuring of its loan obligations E-Settlement Limited concealed the fact that of the 11 Creditors listed in the Scheme of Arrangement, at least 3 (Three) of the said Creditors have the same/similar Directors and are controlled by the same proprietors as E-Settlement Limited herein.

As a fact E-Settlement Limited and its alleged creditors have already arrogated to themselves 49.6% out of the 80% required by Section 715(1) to pass the Scheme of Arrangement.

The Scheme of Arrangement currently proposed by E-Settlement Limited is inherently unfair to PROVIDUS Bank

As a fact E-Settlement Limited commenced the application in Suit No: FHC/L/MISC/709/2024, vide an Ex Parte Originating Summons to obtain the order therein, without the Court hearing PROVIDUS BANK or any of the other creditors on the propriety of granting the said orders.

Further to the statement above, E-Settlement Limited obtained Court orders affecting the rights and interests in the loan facility extended to it without the Court first hearing PROVIDUS bank or giving it an opportunity to be heard, a breach of it’s right to fair hearing.

E-Settlement Limited misrepresented to the Court the true and actual position of its indebtedness.

The prayers sought in this application are to protect the rights and interests of PROVIDUS Bank the party, affected by the order.

Consequently, It is in the interest of justice to grant this application. E-Settlement Limited will not be prejudiced by the grant of this application. The court has adjourned for the hearing of the application.