REQUIREMENTS & QUALIFICATION TO ACCESS FEDERAL GOVERNMENT FINANCIAL INTERVENTION FOR MODULAR
REFINERY through Nigerian Content Development and Monitoring Board (NCDMB).
One of the NIGERIAN LOCAL CONTENT policy strategy to reposition the Nigeria Oil & Gas industry, a roadmap of short and medium term priorities aimed at developing a stable and enabling Oil and Gas landscape with improved transparency, efficiency, stable investment climate and a well-protected environment, tagged “7big wins” was developed and launched by His Excellency, Mr. President in October 2016.
The main objective of Federal Government of Nigeria’s intervention in the development of Modular refineries as part of its specialized project scheme is to support qualified indigenous entrepreneurs through funding to profitably build modular refineries that meet
internationally acceptable environmental standards and to eliminate the menace of illegal refineries in the Niger Delta region with the attendant negative impact on the environment, security, and socio-economic activities of the area.
The following checklists of requirements have been prepared to aid/guide entrepreneurs and project promoters in the preparation
and submission of proposals to the Board for support/partnership in the establishment of modular refineries. For ease of reference, the checklists have been grouped into the following 4 areas:
C) Regulatory, and
D) Project Delivery
TECHNICAL REQUIREMENTS for MODULAR REFINERY FINANCIAL SUPPORT
Land requirements/ status of acquisition
Process layout & description
Finished products yields & Evacuation
Bye-products & bye-products evacuation
Safety, Health & Environment
FINANCIAL & COMMERCIAL REQUIREMENTS for MODULAR REFINERY FINANCIAL SUPPORT
B. FINANCIAL & COMMERCIAL
Project funding partners/Current Equity Structure
Current Debt Profile
Capital requirements for the project
Specific offer/participation required from NCDMB
The Market- marketing, strategy & sales
REGULATORY REQUIREMENTS for MODULAR REFINERY FINANCIAL SUPPORT
Corporate Registration Details
DPR Approvals – License to Establish (LTE), FEED, Approval to
Construct (ATC), etc
EIA/Social Impact Analysis Approvals
PROJECT DELIVERY REQUIREMENTS for MODULAR REFINERY FINANCIAL SUPPORT
D. PROJECT DELIVERY
Project delivery schedule
The following should also be noted in the preparation of the proposals.
1. Ownership and Operations: The Modular Refinery Company must have at least 51% Nigerian Ownership and must be promoted by a company which is already in business as a going concern in the Oil and Gas Industry.
2. Capacity: The range of capacities of modular refinery projects within the scope of consideration shall in the range of a minimum of 1,000bopd and a maximum of 5,000bopd. The project promoters shall be specific on the capacity of the modular refinery they seek to establish.
3. Location: The project must be located in any part of Nigeria, but preferably in the Niger Delta region for the following reasons:
To reduce capital outlay
To ensure nearness to crude oil sources/feedstock
To reduce the risks of disruption of production through pipeline vandalism.
4. Target Market: The target market for the refined products must be primarily local and international where the need arises.
5. Business Plan: As part of the proposal, the Company must provide a well articulated and satisfactory business plan and financial projections which clearly demonstrate the viability of the business. This is meant to further provide full appreciation of the business model, concepts, operations, risks and opportunities, management, and other pertinent information that will aid the review of the proposal.
6. Financial Highlights:
Payback period should not exceed 5 years with a moratorium period of 2 years for construction. (Tenor not exceeding 7 years all in)
Equity contribution of at least 20-25%
Minimum Acceptable Debit/Equity ratio shall be 80%/20%
IRR of at least 25-30%
7. NCDMB Equity Contribution: NCDMB will not be expected to make equity contribution that is greater than the promoters of the project. Exceptional cases will require the consent of the Governing Council of the Board.
8. Local Content Level: A minimum of 30% in the value of goods and services for the project must be provided by local sources or indigenous Nigerian businesses.
9. Board and Management- The members of the Board and top management of the Modular refinery must be people with the following attributes:
Technically qualified and experienced professionals.
Provide evidence of a proven track record in the Oil and Gas or Refining industry.
They will be required to provide satisfactory credit rating from approved Credit Bureaus in Nigeria.
10. EPC/Technical Partner and OEM: The modular refinery will be required to have an internationally recognized EPC or Technical Partner. In addition, the OEM for the inner battery of the refinery must be recognized and have a proven track record.