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Indications show that Nigeria may soon witness influx of modular refineries to augment the Dangote refinery. Wealthy Nigerians have shown interest in investing in the sector that was once neglected.  Apparently, this will lead to challenges.

Africa’s richest man Aliko Dangote, is building a 650,000 barrel-a-day refinery in Nigeria that will help cut the nation’s $7 billion annual fuel-import bill. Such is the pressure on its finances that the government is pursuing another option: giving licenses to mini refineries, some of which have capacity of as little as 1,000 barrels a day. If all the small processors are built, their collective output would surpass Dangote’s giant facility.

Africa’s most populous country, Nigeria, is desperately trying to revive an industry that has languished for years. Decrepit state refineries operate far below their capacity, forcing the country to import 90 percent of its oil products even as it exports large volumes of crude. Forty modular refineries registered, ten are in advanced stages of development and could be producing fuel as early as next year. Minister of Petroleum Resources, Dr. Ibe Kachikwu said recently that the modular refineries will resolve many issues bothering fuel imports.

Many of Nigeria’s oil fields are scattered around the vast delta in the country’s south, which is often difficult to access and operate in. Setting up large infrastructure projects in the swamps is a challenge. The small-is-better philosophy also received a boost when Bank of Industry, secured a $500 million loan from China in September for lending to modular refineries projects to boost the country’s midstream industry.

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