The federal government yesterday took a bold step towards resolving the challenge posed by the continued importation of refined petroleum products as it signed a memorandum of understanding (MoU) with the Republic of Niger on a project that will facilitate the construction of a 100,000 – 150,000 barrels capacity refinery to be located in Katsina State.
The signing ceremony held at the presidential villa, Abuja, was witnessed by President Muhammadu Buhari and his counterpart from the Republic of Niger, Mahamadou Issoufou.
The project is estimated to cost about $2 billion (over N700 billion) according to the founder of Blackoil Energy Refinery, Ibrahim Zakari. According to him, his company will spearhead the first 100 per cent privately driven refinery in the north, which is projected to provide over 2,500 direct jobs and over 10,000 indirect employment opportunities not only to the state but Nigeria in general.
In an address at the ceremony, President Muhammadu Buhari noted that Nigeria saw the cooperation as a win-win situation for both nations as a refinery would be constructed in Katsina while the stranded crude from Niger would find market in Nigeria.
“Nigeria and Niger have excellent relations for several decades, as neighbours sharing a long border with common cultural and historical ties. “Nigeria sees this cooperation on crude oil export from the Republic of Niger and construction of refinery facilities in Katsina State as a win-win for both nations.
“The initiative will not only provide a reliable market for the stranded crude from the Niger Republic but will also provide petroleum products for Nigeria, as it aggressively pursues its aspiration on petroleum product self-sufficiency,” President Buhari said.
He further expressed hope that the current frontier exploration efforts in the Northern part of the country (Chad Basin, Gongola Basin, Sokoto Basin, Bida Basin and Benue trough) would also result in the provision of additional hydrocarbon inflow to the corridors of the proposed pipeline and a potential refinery around Kaduna axis.
“This project will be private sector-driven with the full support of the governments of both countries and I am happy to understand that several expressions of interest from prospective investors are already being received,” Buhari also stated.
He announced that a Steering Committee had been set up, chaired by the Nigerian minister of state for petroleum resources, Ibe Kachikwu, with the Nigerien minister of petroleum as alternate chairman, to provide strategic leadership, direction and governance oversight for the project.
Buhari added: “It is my expectation that by December 2018, this group will come up with a detailed roadmap and guideline leading to actual execution of the projects.
“The detailed roadmap should cover the following: bankable feasibility studies for both the refinery and pipeline projects; optimal project site, pipeline routes and details; security plan; and selected consortia of investors for both the refinery and pipeline projects.”
On his part, the Niger Republic president said the signing of the memorandum constituted the basis for mutually beneficial cooperation between the two countries. He noted that Nigeria and Niger shared common problems and should therefore share solutions.
“Africa will only to develop if they work together. We know what to do. We only need to move into taking meaningful actions. We are trying to develop the value chain for our mineral resources and product.
“We would be happy to see barrels of crude oil refined in Niger and exported to Nigeria,” he said. Dr Kachikwu on his part explained that the projects would allow the export of otherwise stranded Nigerien surplus crude oil in a new refinery in Nigeria for improved economic activities for the benefit of the two neighbouring countries.
According to the minister, the projects will be private sector-led multi-stakeholder partnership with or without equity participation from governments or its agencies.
He stated that the project will involve long term contracts for the supply of feedstock as well as adequate funding from reputable financial institutions.
“The projects will provide guarantees and incentives that will safeguard investments and returns at the setup of the company. “As the initiative is of cross border relationship of high significance, the two presidents found time from their busy schedules to be here today to personally witness this ceremony.
“Their presence today is a demonstration of the importance both presidents attach to Nigeria/Niger bilateral collaboration and their determination to provide an enabling environment for the prospective investors in these projects, he said.
On the benefits to be derived from the projects, Kachikwu listed them to include improved economic activities and bilateral relations between Nigeria and Republic of Niger, generation of employment, availability of petroleum products in both countries and less carnage on roads, among others.
“It is my expectation that when these projects are eventually actualised, their contribution to both nations will be significant and the deliverables in revenue and otherwise will further enhance the benefits arising from the sector,” he said.