A former Interior Minister and Executive Chairman, Genesis Shipping Worldwide, Capt Emmanuel Iheanacho, is to float a refinery in Lagos to boost local participation in crude oil lifting, it has been learnt.
The parcel of land for the facility, it was gathered, was bought from the Onisiwo Family of Irede, a coastal town at the back of Apapa Port, Amuwo-Odofin Local Government in Lagos.
When The Nation visited the site at the weekend, some leaders of the area said they were in support of the project and urged the government to support it.
A senior official of the Department of Petroleum Resources (DPR), who craved anonymity, said Iheanacho, who is also the Executive Chairman of Integrated Oil and Gas, had been given permission to build the refinery.
When the refinery begins operations, the official said, indigenous shipowners would be able to participate in the lifting of crude oil from it. “Foreign vessels involved in offshore operations, collect a minimum of $5,000 daily. This is the least amount collected by foreign vessels on the nation’s waters and that is why the indigenous ship owners must be empowered to participate,” he added.
The country, he said, is losing N1.8 trillion yearly to foreign ship owners and their choice of insurers over the indigenous companies in the lifting and importation of fuel.
The project, the DPR official said, would end foreign domination in the capital intensive crude oil lifting business and allow indigenous ship owners to participate in the highly lucrative enterprise.
The Part II of Coastal and Inland Shipping (Cabotage) Act of 2003, stipulates that “a vessel other than a vessel wholly owned and manned by a Nigerian, built and registered in Nigeria shall not engage in the domestic coastal carriage of cargo and passengers within the coastal territorial inland waters, of any point within the waters of the exclusive economic zone of Nigeria.”
The Nigerian Maritime Administration and Safety Agency (NIMASA) is responsible for the enforcement of the Act.
“Despite the Cabotage Law, Nigeria is losing N1.8 trillion yearly to foreign ship owners in cargo haulage. Under the law, coastal trade is reserved for indigenous ship owners; their foreign counterparts are allowed to participate in the business subject to a waiver by the Federal Government,” he said.
He continued: “The law is not serving its purpose because the indigenous ship owners are not allowed to handle cargoes that pass through the nation’s waterways.
“When the Cabotage regime came on stream, the intention was mainly to stimulate the development of indigenous capacity in the Nigerian maritime industry, if many years after, the situation remains the same despite the despite the efforts by NIMASA.
“In the oil and gas industry, Nigeria has close to 500 oil wells. For each well, there is a rig, which is supported by a minimum of five ships, and they are called oil support vessels. Each of the foreign ships earn $5,000, while others earn $150,000 per day.”
He said:“The Cabotage Act seeks to reserve domestic coastal trade or Cabotage trade within Nigerian coastal and inland waters to vessels built and registered in the country, wholly owned and manned by Nigerian citizens. Foreign-owned vessels and companies are, however, allowed to participate in Cabotage trade within Nigerian waters, subject to obtaining a waiver and or license from the Federal Ministry of Transport.
“More than 10 years after, not much has changed, as the indigenous vessel owners, who the law was designed to protect remained sidelined and impoverished while foreign shipping companies dominate the trade, while many Nigerians are jobless.’’
He added:“I can say conveniently that even in the crude oil carriage that they do today, if indigenous ship owners are allowed to do 60 per cent of their own allocation, they will be putting back more than about N1.5 trillion or N1.8 trillion into the economy and that is huge contribution to the budget.”
The ex-Minister also told The Nation at the week-end that the indigenous ship owners are yet to benefit from the Cabotage shipping regime.
He said the Act has failed to give the envisaged financial impetus and active participation in the nation’s maritime trade to indigenous ship owners.
Apart from identifying the inclusion of waivers clause as one of the factors militating against the Cabotage Act, he said the low investment in the local refinery has made indigenous ship owners vulnerable in competing with the International Oil Companies (IOC).
Although, he said, he was not against foreign companies in the country, the Master mariner said most of the foreign ship owners are hiding under the provision of waiver in the Cabotage law to enjoy the lifting of the crude and use foreign crew instead of employing Nigerians to man their vessels.
By the time the refinery comes on stream, many indigenous shipping companies would be involved in the coastal trade and not less than 5,000 direct and indirect jobs would be created through the venture.
Ihenacho said he has since received a licence to establish the refinery, adding that construction work would commence once he gets the government nod to do so.
He said he was not happy that “Nigeria, as the giant of Africa, still exports crude overseas for refining and re-import same.”
The former Minister said the planned refinery would be built in accordance with the dictates of the Department of Petroleum Resources and the Ministry of Environment.
Officers of the Ministry of Environment, he said, had visited the site of the project for them to receive Environmental Impact Assessment Certificate.
“We have said it for so many years those indigenous ship owners should be involved in crude oil lifting, but nobody seems to be listening because of involvement of the IOC. Now, we have resolved to build a modular refinery in Lagos so that we can add value and create jobs. This is what we have embarked upon. I have a licence to establish a refinery. By the time we commence operation, the ships we bought with several millions of naira can now be put to use effectively.
“Before granting licence to establish a refinery, DPR must inspect the proposed site. This they have done. There is a licence for every stage; to establish, to construct and operate a refinery, all dependent on your ability to fulfill stipulated requirements.
“Our focus now is to address the issue of Environmental Impact Assessment, feasibility study and all. We have been carrying the host community along and they are pleased to be a part of this project. The project will be financed by Nigerian and international financial institutions,” Iheanacho added.
He said the country had for years, diverted its funds by allowing crude to be shipped by foreign vessels on a Free on Board Basis. He added that the value on the crude oil in terms of the refining process by way of jobs creation had also been lost to other countries.
“The profit from all these ventures is left in foreign lands. It is time we invest in our country and develop it. If we are successful at this venture, refined petroleum will be much cheaper than what we are paying for currently,” he said.