In this interview, Prof. Adeola Adenikinju, of the Centre for Econometrics and Allied Research (CEAR), University of Ibadan, Oyo State, who has consulted for the Nigeria Liquefied Natural Gas, talks about the importance of modular refineries in the Niger Delta
What do you think are the benefits of modular refineries in the Niger Delta?
I think there is the need for a policy to streamline – define the structure of modular refineries that the country needs. It is a good development to have modular refineries in Nigeria and I think their existence will contribute to mitigating the perennial crisis of fuel scarcity. It will also help to some extent to address the issue of fuel subsidy along with its attendant challenges. The establishment and smooth running of modular refineries will also bring about employment to the benefit of the Nigerian economy. It will create job opportunities especially for our youths and professionals who currently walking on the streets without a job. But the important thing is that modular refinery is all about small-scale refining. If we have small-scale refineries you can be sure that they are easier to manage even though its impact on the general economy may not be as huge as the conventional refineries. One other thing is that the efficiency of modular refineries can be very high. I support the widespread establishment of modular refineries and I think the Federal Government should support it.
What can the Federal Government do to sustain the idea and establishment of modular refineries in the country?
They (modular refineries) need to be encouraged and properly structured to ensure that the issue of quality is guaranteed. These refineries are not going to be set up just for the sake of being a solution to fuel scarcity or to stop the proliferation of illegal refineries. Quality assurance should be a top priority. The Federal Government must ensure that the modular refineries meet the needed specifications to produce fuel. Government can also collaborate with academia and research institutions on how to work with these modular refineries to ensure good quality is guaranteed so that Nigerians can be sure that what they are buying is safe and can meet their needs. These will encourage Nigerians to support the idea too. In my own view, I think the Federal Government needs to incorporate the overall structure of fuel supply value chain in Nigeria.
How can this help to deal with the menace of illegal refineries?
When there are regulations, and the operators of the modular refineries are monitored – while eliminating black-market or underground operators – there will not be any illegal activities in that direction. When there are proper regulations and the supply chain is not disrupted or compromised, the modular refineries should be able to operate within the legal ambit, knowing that if they commit any infractions or violate any regulations, then they can be sanctioned. It can work and the government should see it as something that can create a pathway for job creation, reduction of illegal activities in the Niger Delta and promote peaceful existence. It will also reduce the amount of foreign exchange that will be spent on exporting crude oil and importing its refined products.
With modular refineries, do people have to worry about the issue of pollution?
Once the process is legalised, standards requirements are spelt out, and regulations, quality control measures are put in place, those being issued modular refinery licences will ensure that they play according to the rules. Once the Federal Government specifies exactly how it wants the modular refineries to operate in terms of protecting the environment – stating the amount of emissions legally acceptable and the type of equipment that can be used – I think the operators would have to play ball. It is now the responsibility of the government or its authorised agencies to monitor these modular refinery operators periodically to ensure they act accordingly. All this will spur other people to invest to ensure that those conditions are met. They will be able to invest to ensure that quality standards are met – that will help to reduce pollution or degradation of the environment. Like I said, it is when you have people operating illegally that the environment – the air, water and land – is damaged reckless abandon. The government should find a way to encourage those operating illegal refineries to understand that their working with the government is to improve the value chain and thus bring them on board to operate legally and according to laid down regulations. The DPR is there to ensure that the fuel supplied to the country meets certain specifications and quality. If the fuel didn’t make it, then there will be sanctions.
What about the cost of establishing modular refineries?
Modular refineries are like small-scale enterprise; and anything that is small-scale, you don’t need billions of dollars to set them up. They can easily come on board, easy to set up. The cost of operation is not very expensive compared to huge ones. The downtime of a modular refinery is minimal compared to big refineries. Therefore, I think modular refineries do have comparative advantages that Nigerians can harness. I will like to reiterate that establishment of these refineries should provide an opportunity for the oil industry to work with the universities and research institutions so that we can we ensure the development of local capacity to produce some of the equipment needed to keep the refineries running.