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Iheanacho seeks funding support for local refineries

Captain Emmanuel Iheanacho

Capt. Emmanuel Iheanacho, the Chairman of Integrated Oil and Gas Limited and promoter of Eko Refinery and Petrochemical Company, has appealed to the Federal
Government to support local refiners with sovereign guarantees loans for the
completion of their modular refineries.

 Iheanacho made the appeal in Lagos against the backdrop of local refiners’ inability to
secure loans to complete their ongoing modular refineries.

Sovereign guarantee is a promise by the government
to discharge the liability of a third person in case of his default which are
contingent liabilities of the central and state governments that come into play
on the occurrence of an event covered by the guarantee.
Iheanacho said government did not necessarily need
to provide its own funding, but give guarantee to any of the local promoter of
refining companies that demonstrated that the refinery’s design and programme
were viable and “that is the only way to help to secure loan.”
“It simply means government is going to give a
sovereign guarantee for any money that is loaned; there is money all over that
place, but they are awaiting government to make the move to agree to give
sovereign guarantee.
“There is no reason why our government will not be
assist indigenous refiners with that,’’ he said.
Iheanacho said that it seemed that government failed to fully
appreciate the importance of private sector involvement in modular refineries
in Nigeria.
He said that the country was going to save a lot of
money that were being lost to shipping crude oil overseas for refining and
bringing it back as refine products if we had private sector involvement and
people had developed refinery capacity .
“What that means is that we pay lots more from the
fuel that we consumed, but if we refine it locally we will see a significant
reduction on the transportation cost both on transporting the raw product to
refining in abroad and bring it back for consumption in our economy.
“What government ought to have done is to encourage
people who bring in viable ideas, like setting up the modular refineries.
“I know that government always talks about licenses
where about 42 refineries were given licenses and non has come up to me; it’s
not about the licenses that stopping the people, but there are so many issues
in getting a licenses and establishing a refinery.
“You have to understand the business of refining,
you have to understand the market context you must have been able to articulate
the field, from engineering design, detail design and find financing, this is
where government should come in,’’ Iheanacho said.
The refiner said that the essence of the sovereign
guarantee was to enable local refiners seek loans with foreign investors or
banks, adding that there was need for government to stand as guarantors for
local refiners.
He said that government should really appreciate
fully the extra ordinary impact which the development of the indigenous local
refiners will have on local economy.
Iheanacho said that the company has gotten an
approval from the Department of Petroleum Resources to commence construction of
its proposed 20,000 Barrel Per Day (BPD) production capacity modular refinery.
He said that the refinery which was located at
Tomaro Island Port, Amuwo Odofin Local Government Area, Lagos worth 250-million
dollar (N90 billion).
“We (Eko Refinery and Petrochemical Company Ltd)
have gotten the authority to commence construction from DPR which is the final
approval, the first is license to establish and the license to construct.
“We are at the fund raising stage and we are going
to raise funds wherever we can get it from – within and outside the country.
“One cannot commence construction until the company
goes through fund raising stage which is the stage we are now,’’ he added.
Iheanacho also appealed to the government to come
up with a policy that would compel financial institutions to make funds
available to indigenous players who might intend to build modular refineries.
He said that when his 20,000 barrels per day
refinery would reduce importation of refined petroleum products into the
“Financial support is one major area we need
government’s help, that there is need to have many of the small scale refineries
to turn around the economy.
“We can now start exporting more refined products
than we are currently importing.
“Government should make provision for financing
because it is key requirement to do 20,000 barrels per day.
“It requires an investment of millions of dollars.
We need government to assist modular refinery operators.
“We are not asking to be given grants and handout,
but to be assisted in the process of being able to secure financing in major
finance institutions,” he said.
Iheanacho said that if government could assist the
operators to secure finance, it would go a long way to assist them realise some
of the benefits that would drive the country’s economic growth.

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