Investors in Nigeria’s modular refineries have initiated discussions with the African Export-Import Bank (Afreximbank) to access a portion of the bank's planned $18 billion fund earmarked for refinery development across Africa. This move follows Afreximbank's successful financial backing of the $19 billion Dangote Petroleum Refinery, which is now operational and contributing to domestic and international petroleum product markets.

Operators in the modular refining sector, including Clairgold Refinery and Shinjin Petro Chemicals, have engaged with Afreximbank officials to secure funding for their respective refinery projects in Nigeria. Despite these discussions, concerns remain among modular refiners regarding the availability of feedstock, a crucial component that financial institutions often require as part of project guarantees.

The Crude Oil Refinery Owners Association of Nigeria (CORAN), representing both modular and conventional refinery companies, praised Afreximbank for its pivotal role in supporting the Dangote Petroleum Refinery during its construction phase. However, CORAN's Publicity Secretary, Eche Idoko, emphasized that while discussions are ongoing, no modular refinery has yet received financing from the bank.

"Shinjin Petro Chemicals is in talks to establish a 3,000 barrels per day plant, while Clairgold Modular Refineries is exploring funding options with Afreximbank and the Bank of Industry (BOI)," Idoko confirmed.

Afreximbank's Commitment and Challenges

Afreximbank recently announced its commitment to allocate $18 billion towards refinery projects across Africa, aiming to refine at least 50% of the continent’s crude oil production locally. Benedict Oramah, President of Afreximbank, highlighted this commitment at the 2024 Afreximbank annual meetings, affirming the bank's readiness to support transformative projects similar to the Dangote refinery.

Despite these positive developments, modular refinery operators stressed challenges in accessing funds due to project greenfield status, which requires stringent guarantees including proof of feedstock availability and engineering readiness.

Idoko elaborated, "The issue of feedstock remains a critical concern slowing down the funding process. We are optimistic that Afreximbank's recent declaration will lead to tailored support for Nigerian projects."

Concerns Raised by Dangote

Recently, concerns about entrenched interests hindering local refinery operations were echoed by Aliko Dangote, Chairman of Dangote Group. He highlighted challenges from oil sector "mafias" obstructing in-country refining, thereby impacting Nigeria's petroleum product supply and economic stability.

Dangote's remarks, made during the Afreximbank meetings, underscored ongoing struggles against international and local forces aiming to thwart domestic refinery initiatives.

The road ahead for modular refineries in Nigeria involves navigating these challenges while leveraging Afreximbank's financial support to boost local refinery capacities and reduce dependence on imported petroleum products.