Management Related Barriers to Completion of Licensed Modular Refinery Projects in Nigeria

Abstract

Modular refinery projects were born out of a bid by the Federal Government of Nigeria to achieve the three-pronged aim of discouraging illegal oil refining, eliminating environmental degradation and boosting local refining of petroleum products. Investors were granted licenses to establish (LTE) modular refineries (MR) of varying operational capacities. The MR policy has been considered timely and necessary, because Nigeria imports almost all of the refined petroleum consumed locally. However, several years after the take-off of the MR policy, none of the licensed MRs has been completed. Some of the licenses have been withdrawn due to stagnation and lack of visible progress on the part of the investors. This paper aimed to assess the factors hindering the progress and completion of MR projects in Nigeria. Secondary data obtained from the Department of Petroleum Resources (DPR) was used to examine the licensing regime, operational characteristics and progress achieved for licensed MRs. The data was further analyzed and examined using frequency count and percentage analysis which revealed that 59.09% of licensed MRs have funding as the major challenge impeding their completion. This barrier might perhaps be best tackled by linking up MR investors with venture capitalists, rather than through direct funding by government. In extreme cases, government might provide some form of guarantees.