Mr. Emmanuel Iheanacho, the Chairman of the Company, made the appeal in Lagos against the backdrop of local refiners’ inability to secure loans to complete their ongoing modular refineries.
Sovereign guarantee is a promise by the government to discharge the liability of a third person in case of his default, which are contingent liabilities of the central and state governments that come into play on the occurrence of an event covered by the guarantee.
Iheanacho said government did not necessarily need to provide its own funding, but give guarantee to any of the local promoters of refining companies that demonstrate that the refinery’s design and programme are viable and “that is the only way to help to secure loan”.
“It simply means government is going to give a sovereign guarantee for any money that is loaned; there is money all over that place, but they are awaiting government to make the move to agree to give sovereign guarantee.
“There is no reason why our government will not assist indigenous refiners with that,’’ he said.
Iheanacho, who is also the Chairman of Integrated Oil and Gas Limited, said that it seemed that government failed to fully appreciate the importance of private sector involvement in modular refineries in Nigeria.
He said that the country was going to save a lot of money that were being lost to shipping crude oil overseas for refining and bringing it back as refined products if we had private sector involvement and people had developed refinery capacity .
“What that means is that we pay lots more from the fuel that we consumed, but if we refine it locally we will see a significant reduction on the transportation cost both on transporting the raw product to refining in abroad and bring it back for consumption in our economy.
“What government ought to have done is to encourage people who bring in viable ideas, like setting up the modular refineries.
“I know that government always talks about licenses where about 42 refineries were given licenses and non has come up to me; it’s not about the licenses that stopping the people, but there are so many issues in getting a licenses and establishing a refinery.
“You have to understand the business of refining, you have to understand the market context you must have been able to articulate the field, fronm engineering design, detail design and find financing, this is where government should come in,’’ Iheanacho said.
The refiner said that the essence of the sovereign guarantee was to enable local refiners seek loans with foreign investors or banks, adding that there was need for government to stand as guarantors for local refiners.
He said that government should really appreciate fully the extraordinary impact which the development of the indigenous local refiners will have on local economy.
Iheanacho said that the company has gotten an approval from the Department of Petroleum Resources to commence construction of its proposed 20,000 Barrel Per Day (BPD) production capacity modular refinery.
According to him, the refinery, which is located at Tomaro Island Port, Amuwo Odofin Local Government Area in Lagos, is worth 250-million dollar (about N90 billion).