Economy
Crude supply drags as NNPC slows modular refineries’ approval
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
By Mario Deepromoter
The Dollar to Naira exchange rate in the black market, also known as the parallel market (Aboki fx)? Here’s the exchange rate for today, 18th September 2024, based on information from Bureau De Change (BDC) operators
How much is a dollar to naira today in the black market?
As of today, in Lagos Parallel Market (Black Market), the exchange rate for buying a dollar is N1655, while selling is at N1660 on Wednesday, 18th September 2024.
It’s important to note that the Central Bank of Nigeria (CBN) does not recognize the parallel market (black market) and advises individuals to approach their banks for official Forex transactions.
### Dollar to Naira Black Market Rate Today:
– **Buying Rate**: N1655
– **Selling Rate**: N1660
### Dollar to Naira CBN Rate Today:
– **Buying Rate**: N1651
– **Selling Rate**: N1652
*Note*: These rates may vary slightly based on location and the specific Bureau De Change operator.
### CBN’s Outlook on External Reserves and Economy:
The Central Bank of Nigeria (CBN) has raised concerns over factors that may hinder the growth of Nigeria’s external reserves in 2024/2025. The removal of fuel subsidies, rising import costs, and increased debt servicing are cited as potential threats to the reserves.
This was detailed in the CBN’s Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the fiscal years 2024/2025. Despite these challenges, the CBN projects overall economic growth for Nigeria, driven by policies supporting agriculture, oil sector reforms, and foreign exchange market adjustments.
“The outlook for Nigeria’s external sector in 2024/2025 is optimistic,” the CBN noted, with expectations of favorable trade terms due to higher oil prices and improved domestic production. However, the bank also highlighted risks such as lower oil revenues, increased import bills, and rising external debt obligations.
The Secretary General of the Organisation of Petroleum Exporting Countries, Haitham Al Ghais, has blamed tax imposition by major oil-consuming countries, not oil prices as the primary driver of fuel costs.
He disclosed this in a recent statement.
His comments come as Nigeria experienced several petrol pump price hikes in the last one year.
The latest was on Monday when the Nigerian National Petroleum Company Limited announced an additional pump price hike in its retail outlets between N950 per liter and N1,019.22.
Speaking on the factors responsible for fuel price hikes, Al Ghais explained that the prices paid by consumers at the pump were determined by various factors, including the price of crude oil, refining, transportation, marketing costs, oil company margins, and taxes.
According to Al Ghais, revenues generated from oil sales are often reinvested by oil-producing countries into the oil sector.
He stated that OPEC member countries reinvested a substantial portion of their revenue into exploration, production, and transportation projects.
On the other hand, the OPEC boss noted that consuming countries’ governments received significant revenue from taxes imposed on petroleum products.
In 2023, the Organisation of Economic Co-operation and Development’s average share of total tax on the final retail price increased year-on-year and amounted to approximately 44 percent.
“Therefore, for many consumers, taxation can be a more significant factor than the original price for crude, in feeling any pinch in their pocket at the pump,” he stated
“It is a sovereign right for countries and governments to develop their taxation systems, but when there is talk of concerns about the effect of high pump prices on the disposable income of populations, it is important to remember how much of this is from taxes flowing to finance ministries around the world”, he said.
By Mario Deepromoter
The Central Bank of Nigeria (CBN) has reconstituted the board of directors of Keystone Bank.
The move was announced on Wednesday, as part of the apex bank’s strategy to ensure sustained growth for the financial institution.
According to a statement from the Keystone Bank, Lady Ada Chukwudozie has been appointed as the new board chairman, alongside five other non-executive directors. They are Abdul-Rahman Esene, Mrs. Fola Akande, Akintola Ayodeji Olusoji, Obijiaku Samuel, and Senator Farouk Bello.
In addition, the CBN also named two new executive directors, Ladi Oluwole and Abubakar Usman Bello.
Lady Ada Chukwudozie, a prominent figure in Nigeria’s corporate sector, brings nearly three decades of experience in business strategy, management, and administration.
Her expertise cuts across multiple industries, including De-Endy Industrial Company Limited, Dozzy Group, the Manufacturers Association of Nigeria, and Vogue Afrique Magazine.
Abdul-Rahman Esene, with over 43 years of experience in banking, investment management, and corporate finance, has held leadership roles in major institutions such as Fidelity Bank, Afrinvest, and Global Arbitrage International Inc.
Mrs Fola Akande boasts over 25 years of experience in legal, compliance, and risk management, having worked with global brands like Cadbury, Stanbic Chartered Bank, and Shell.
Akintola Ayodeji Olusoji has a distinguished 30-year career in accounting, finance, and business development, having served at institutions such as Sterling Bank, Access Bank, and Intercontinental Bank.
Obijiaku Samuel, with more than 35 years of experience in banking and treasury operations, has left a significant mark on Nigeria’s financial sector, previously working with Zenith Bank and Fidelity Bank.
Senator Farouk Bello, a seasoned banker with over 20 years of experience, has led initiatives across both the public and private sectors, including the National Assembly and Guaranty Trust Bank.
Meanwhile, the two new executive directors bring their vast expertise to the table. Ladi Oluwole, the new Executive Director of Risk Management, comes with over two decades of experience in credit and enterprise risk management, including previous roles at Bank of America. Abubakar Usman Bello, Executive Director for the Northern Directorate, has extensive experience managing corporate, retail, and public sector clients.
Speaking on the appointments, Keystone Bank’s Managing Director and CEO, Hassan Imam, expressed confidence in the new board members, stating that their wealth of experience would play a crucial role in the bank’s continued repositioning and growth.
“We are pleased to welcome the new chairman, non-executive directors, and executive directors to the board of Keystone Bank. We are confident that their extensive experience will be invaluable as we continue to reposition the bank to seize emerging economic opportunities while maintaining strong corporate governance and providing our customers with a secure and reliable banking experience,” Imam said.
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