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LCCI to FG: Embrace joint venture model to revamp moribund refineries

LCCI to FG: Embrace joint venture model to revamp moribund refineries
February 18
20:31 2022

The Lagos Chamber of Commerce and Industry (LCCI) has called on the federal government to revive local refineries.

The chamber said this would curtail the hazards associated with fuel importation.

Michael Olawale-Cole, LCCI president, said this in a statement issued on Friday.

He said beyond politics, the government should consider the economics of refurbishing and maintaining existing refineries.

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According to NAN, Olawale-Cole advised government should take decisive action as to whether to own the refineries or involve the private sector in their management for profitability and sustainability.

“The government may need to consider a joint venture model of the kind with Nigeria Liquified Natural Gas where the government holds 49 percent and the private sector 51 percent for the refineries,” he said.

“As at the end of 2020, the NLNG raked in revenue worth 114 billion dollars, paid 9 billion dollars in taxes, and 18 billion dollars in dividends to the federal government.

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“This model can be replicated with the refineries. A 100 per cent ownership and management by the government is not advised.”

Olawale-Cole said refining crude oil was the most sustainable solution to fuel importation challenges.

He said the call had become pertinent due to the importation of off-spec fuel.

The president said that having domestic refineries in operation to refine crude oil for local consumption and exports would also boost Nigeria’s foreign exchange earnings.

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He emphasised the need to conduct an extensive and conclusive investigation to unravel the circumstances that led to the compromised importation.

He said the results of the investigations should point to actionable penalties for all parties involved to serve as a deterrent against future occurrences.

“The news about the importation of contaminated fuel and subsequent recall of same, came to Nigerians as a rude shock as Nigerians had trusted that there was a fuel importation system that could not be compromised in the manner it happened last week,” Olawale-Cole said.

“This is disappointing, risky and calls for an immediate overhaul of our import processes and systems to forestall any chance of future occurrence.

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“One cannot imagine the danger this portends if it had happened or should happen with aviation fuels for our airlines.

“We also urge the government to conduct an audit of the current processes towards having a standardised system that meets international best practice.”

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The LCCI boss also urged the government to create an enabling environment where private refineries can thrive.

He said Nigeria could save about N6 trillion yearly from fuel subsidy and associated costs through domestic refining.

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According to him, the figure represents about 50 percent of Nigeria’s expenditure (when you add the recent proposed N2.56 trillion supplementary budget to cover six months fuel subsidy) in the 2022 budget.

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