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Nigeria throws doubt on planned $1.7bn refinery

09.13.2012  | 

In a statement, Niger Delta Refinery said it has found investors willing to spend $1.7 billion building a refinery in Nigeria. But Nigeria's regulator for petroleum resources said the project still requires government approval, undermining claims that the project was just awaiting completion of "formalities."



ACCRA, Ghana -- Nigerian officials this week disputed claims by private investors that they had already received the government's endorsement for a plan to build large oil refinery in Nigeria, a major oil-exporting country that refines very ittle of the crude it produces.

In a statement emailed Monday, Niger Delta Refinery and Petrochemicals Co. said it has found investors willing to spend $1.7 billion building a refinery in Nigeria.

But the country's regulator for petroleum resources said the project still requires government approval, undermining a claim on a website for one of the three involved companies that the project was just awaiting completion of "formalities."

Nigeria produces 2.6 million bbl of light, low-sulphur crude each day - more than any other country in Africa. The Nigerian crude's properties make it easy to refine.

Yet the nation's decrepit refineries process almost none of that crude, leaving the country of 167 million people dependent on oil imports. Indeed, most of the petroleum the planned refinery would produce would be exported, the statement said.

Niger Delta Refinery and Petrochemicals said its majority shareholder, closely-held Singaporean investment fund Eton Finance Private Ltd., agreed to finance, build, and jointly operate a new refinery with local company Qua Petroleum Refinery Ltd.

The announcement didn't include further detail on the funding or ownership of the new refinery. When telephoned, a receptionist for Eton's Nigeria office said company officials wouldn't offer additional comment.

Qua's two principal assets - listed on the company's website - appear to be a plot of land two kilometers from an ExxonMobil oil terminal plus a license to construct a refinery, granted in 1996. At that time, Nigeria was under the thumb of military dictator Sani Abacha.

The company's website says the license is still valid, but regulators from Nigeria's Department of Petroleum Resources disagree. Going by the department's records, Qua's license expired in April 2006 and hasn't been since revalidated, Deputy Director for Public Affairs Belema Osibodu said in a forwarded email exchange.

"It does take a while for refinery projects to go from agreements signed to actualization," Mrs. Osibodu wrote in her email.

Niger Delta Refinery and Petrochemicals' statement said the company would "complete financial and administrative formalities within the next two months." Qua wasn't immediately able to comment when contacted by Dow Jones Newswires.

Dow Jones Newswires

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Dr Lawrence Ebai-ngoh

Mrs. Osibodu is right. It takes time for "formalities" in most developing countries like Nigeria to be completed. But there is hope for the project. Nigeria needs such a project to take off, the ,the better. Qua should tell the world the truth about the project. Giving contradicting reports from that of the government may jeopardize the economy of Nigeria. It may create doubts in the minds of potential investors.

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