Investigating the challenges of refinery construction in Nigeria: a snapshot across two-timeframes over the past 55 years.

Iheukwumere, Obinna Emmanuel; Moore, David; Omotayo, Temitope

Abstract

The sub-optimal performance of state-owned refineries in Nigeria has led to a significant gap in the supply of refined petroleum products (RPPs) in the country. More so, the growing demand for these products has further widened the gap to the range of 500,000 – 600,000 barrels per day (bpd). Consequently, most of the imports for RPPs in Nigeria are being filled from the United States and North-Western Europe at the expense of the Nigerian economy. However, given the abundance of petroleum resources in Nigeria and its long history in the production of oil, it is unfortunate that the local refineries are hardly maintained to meet the needs of the local population. In addition, the inability of the Nigerian state to build additional refining capacity to cushion its domestic supply gap for RPPs has become a major concern. With more than 40 licenses issued to private companies since 2002, only two companies (Niger Delta Petroleum Resources Refinery and Dangote Oil Refinery) have made noticeable progress in new refinery construction. This paper is focused on investigating the current challenges of refinery construction in Nigeria. This is done with a view of comparing the drivers and enablers of productivity in construction in this sector during the period of 1965 – 1989 and how they differ from the current period of 2000-2019 in Nigeria. A systematic literature review within the academic journals, source documents from the industry, relevant interviews from published news media and consulting organisations were used to identify and categorise these challenges. The findings of this study were validated by interviews from experts across key industries in this sector. The study reveals that change of ownership structures from the government sector to the private sector between the two eras, present additional challenges. These challenges cut across availability of capital, inconsistent government priorities and access to land for construction. Others include cronyism and corruption, weak political will, unstructured refinery licensing scheme, security challenges and economic factors regarding the regulated downstream market in Nigeria. Key recommendations proffered to help solve these problems include a private sector-led partnership with the government in the form of public private partnerships (PPPs), a review of existing methods for licensing refineries for private organisations, the development of local manpower with relevant technical skills to help lower the cost of expatriate labour and the establishment of more designated clusters as free trade zones within the oil-producing Niger Delta. These recommendations will help lower the entry barriers for private organisations in this sector.

Citation

IHEUKWUMERE, O.E., MOORE, D. and OMOTAYO, T. 2020. Investigating the challenges of refinery construction in Nigeria: a snapshot across two-timeframes over the past 55 years. International journal of construction supply chain management [online], 10(1), pages 46-72. Available from: https://doi.org/10.14424/ijcscm100120-46-72

• Journal Article Type: Article
• Acceptance Date: Jun 29, 2020
• Online Publication Date: Jul 31, 2020
• Publication Date: Jul 31, 2020
• Deposit Date: Sep 10, 2020
• Publicly Available Date: Sep 10, 2020
• Journal: International journal of construction supply chain management
• Print ISSN: 1179-0776
• Electronic ISSN: 1179-0776
• Publisher: Auckland University of Technology. School of Engineering
• Peer Reviewed: Peer Reviewed
• Volume: 10
• Issue: 1
• Pages: 46-72
• DOI: https://doi.org/10.14424/ijcscm100120-46-72
• Keywords: Construction; Government licensing; Nigeria; Performance; Private refinery
• Public URL: https://rgu-repository.worktribe.com/output/966481