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Nigeria signs $4.5 billion deal to build 6 new refineries
Here we go again: Two of six refineries new refineries could be built as early as next year according to Yemi Kolajo, a spokeswoman for Nigeria’s trade ministry. It is part of a larger $4.5 billion deal that was announced late on Monday. Nigerian-based Petroleum Refining and Strategic Reserve Ltd. and US-based Vulcan Petroleum Resources signed a memorandum of understanding in the Abuja.
This is a move to increase the oil refining capacity of the country, a deal sorely needed to offset the cost of importing oil and to curb excesses and corruption in the cloudy fuel subsidy regime currently embroiled in a scandal and recently revealed that the cost for 2011 alone was N2.9 trillion.
Edozie Njoku, chairman of the Nigerian partner, said Tuesday that all the funding for the project would come from outside the country. He said they opted for modular refineries because there are many local challenges to building a refinery from scratch. Each refinery will be built in the U.S., disassembled for shipping and reassembled in Nigeria, he said.
“Our job as the local partner is to make sure that the government does all we asked of them,” Njoku said, “that they approve all the permits, etc.” He said the U.S. partner company was a venture capitalist that would be bringing investors as well as technical know-how. The company could not immediately be reached for comment.
The government has shown a lot of will to make this happen, Njoku said. “They really want to start refineries in this country, they are committed to it.”
The deal comes six months after the Nigerian government tried to end a cherished fuel subsidy program that had kept Nigeria’s largely imported fuel cheap for more than two decades. President Goodluck Jonathan said the country could no longer afford it. The move meant that prices at the pump jumped from 45 cents per litre ($1.70 per gallon) to at least 94 cents per litre ($3.50 per gallon) on Jan. 1. Jonathan later announced a new, partially subsidized price of 60 cents a litre ($2.27 a gallon) to stop a six-day national strike.
When completed, the refineries will be able to process 180,000 barrels a day.