Home Economy Nigeria-Niger refinery Bilateral Agreement; what is in for the common man?

Nigeria-Niger refinery Bilateral Agreement; what is in for the common man?

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What prompted the Nigeria-Niger refinery Bilateral Agreement?

Nigeria and the Niger Republic share certain commonalities, geographically; Niger is bordered around the roads of Katsina, Kano, Jigawa, Sokoto with a large expanse of land. One peculiar commonality with the Niger Republic is the traces of abject poverty. In the past, the people are known for petty trade with others serving as security private guards in Nigeria, these have changed now given the fact that the country is been blessed with the abundance of hydrocarbon. Today, they have a reserve of over 1 billion barrels of crude. In addition, they are blessed in solid minerals; it is a known fact that Niger has gold, diamond but unfortunately, the country is landlocked. They have no access to any big ocean through which international trade will be transacted. With the blessing of crude in large quantity, the easiest and best means of transporting this crude to the international market is by sea, this route, unfortunately, Niger Republic is not blessed with. The closest sea where vessels or ships can transport product from Niger is about 2500km. Since the discovery of oil, Niger has been looking for a potential market. Incidentally, over 40% of petroleum consumption in Nigeria is in Northern Nigeria. Kano, in particular, provides the second largest consumer rate after Lagos. You know the distance is just a few hundred kilometers miles away Kano and kano is surrounded by Jigawa to Borno, Bauchi, and Gombe. These states naturally get their petroleum consumption from kano which is the reason why kano has a strategic reserve as a depot which is transported from Kaduna to Kano and kano dispenses through Jos, Maiduguri and to other locations. So, based on the bilateral relationship between Nigeria and Niger, one of the options Niger government has taken is to see how they can bring in the crude from Niger to Nigeria because there is a massive market. As you know, Nigeria imports over 70% of its petroleum products from outside Nigeria- from countries as far as Russia, the US, and many other European countries. With this opening in the Niger Republic, we can tap into this huge opportunity to import crude oil into Nigeria. This move will ensure our self-sufficiency in petroleum products requirements and eventual export of petroleum product. With Dangote’s 650 barrel refinery setup, Nigeria will be on the path of petroleum sufficiency. This is the scenario, Niger has the crude, we have the market, Nigeria, therefore, becomes a veritable destination for a robust rise in the economic relations between the two neighboring sister countries.

WE: What are the funding modalities for this proposed refinery between Nigeria and the Niger Republic?

The proposed projects for the construction of crude oil pipelines from the Republic of Niger to Nigeria and establishment of a new refinery at a border town in Nigeria is envisaged to be wholly private sector financed and the proposed Crude Oil Export from the Republic of Niger and Construction of Refinery Facilities posit immense benefits and opportunities for Nigeria.

WE: What are the viable gains of this bilateral relationship with Nigeria?

The refining opportunity in Nigeria is a great initiative. Its impact transcends economic gains for investors and entrepreneurs asides the potential contributions to national development. The projects will increase trade between Nigeria and Niger by giving access to each other’s markets and opening the markets to other successful industries which will create additional jobs. Measurably, this signed bilateral relationship will improve economic activities and bilateral relations between Nigeria and the Republic of Niger, leading to a generation of more employment for the citizens. You can’t also rule out exponential Petroleum Product availability in Nigeria/Niger on the structured legal framework as well as the development of small and medium scale industries through backward and forward linkages. This move will ultimately ensure socio-economic development of the rural areas through the provision of social amenities by the refinery development. There is the big win of reducing the carnage on our roads and deterioration to the road infrastructure as heavy-duty trucks would be phased out eventually.

 

WE: Why the choice of Katsina?

The decision to have the refinery at the border town of Niger and Katsina is to minimize the distance and reduce the length of pipeline and by every implication reducing the cost of the project. This decision is based on common sense as we await the technical advice of internally reputable consultants to carry out a robust study that will determine the best convenient and most economical location. So, part of our mandate is to identify such consultants that will bring in a feasibility study that is backed up with credible options and attractive to any investor to put in his money. We will be guided by standards are internationally acceptable.

WE: What is the level of government involvement in this project?

This venture is going to be private sector driven, the government has no intention of putting its money; the investment would be open all including international investors. Of course, there will be government support in all ramifications. If Nigeria and the Niger Republic desire to take some minor equity, it is going to be open to them. The beauty of taking minority equity is that at least government would be obliged to provide the necessary enablers such as security. This initiative is to have robust management-running as purely business devoid of government interference and influence.

With private business experts in charge of this venture, they own the assets and pay royalties and taxes to the government. This move will lessen the damage to road infrastructure as trucks that travel all the way from Lagos, Port-Harcourt, Warri and other locations may not have that need to travel far. Accidents will be minimized; the cost of repairs is eliminated and a significant amount of money saved by the government. Specifically, the cost of regional cost which is managed by the Petroleum Equalization Fund will be minimized as they won’t need to subsidize the cost of transportation. Besides, the business activity around the downstream will be created as services for lubricant, kerosene and other derivatives from a refinery business activity.

 

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