The Major Oil Marketers Association of Nigeria (MOMAN) has said the inability of its members to access funding has stalled plans for the take off of members’ refineries.
MOMAN Chairman, Mr.Tunji Oyebanji, disclosed this at a media interaction in Lagos on Thursday.
He regretted that, two years after some of its members were granted refining licenses by the Department of Petroleum Resources (DPR), the dream to commence refining operations has become a tall order.
The MOMAN Chairman who is also the Managing Director of 11 Plc, formerly Mobil Oil Nigeria Plc, explained that, though crude oil refining was part of MOMAN’s responsibility as a way of boosting accessibility and availability of petroleum products in the country but lack of funding has made the aspiration impossible
“Refining is a global business that requires huge investment. But our members can’t get loans from banks because once it got to the stage where they were asked how they intend to recoup investment, they cannot provide answers. There’s no way we can recoup investment in a regulated market,” he said.
‘‘The funding requirement for refinery runs into billions of dollars. And for us to enter into such business, we need the support of the banks which we cannot get at the moment because the downstream sector is not yet deregulated. That’s why you see our members holding licensees without utilizing same,’’ he lamented.
He stated that there was need for a policy direction on the future of the downstream sector in next five years, adding that the lack of a policy framework for the industry remained a major setback to the potentials.
“The industry framework as presently in place should be reviewed. Legislation like the Petroleum Industry Bill (PIB) should be passed. Without this, we have an industry that is naturally dying,”.
He argued that MOMAN members were really suffering from lack of policy direction for the sector, saying many projects that ought to boost infrastructure development have been stalled
“Once there is no scarcity, people don’t care about what is going on along the distribution value chain. Jobs are being lost, other companies that provide logistics for the sector are dying. In the long run, it will have a negative impact on the economy as a whole.
The entire value chain needs to be catered for through government policy. Most international oil companies have divested from the downstream sector, others have closed their terminals and this is not good for the industry.”
He explained that the reason for unattractiveness in the downstream sector is due to the fact that the sector is regulated as against deregulation.
“We are tied to a margin that we cannot adjust. Poor profit margin, low investment in infrastructure like pipelines, tank farms, depots and trucks are factors hindering growth in the sector,” he said.