CORAN Urges FG to Address Challenges Facing Domestic Refineries

CORAN further called for a domestic crude-pricing framework that reflects the actual circumstances of transactions, arguing that international benchmarks should not be applied mechanically where refiners bear additional domestic transportation, trucking, barging or pipeline costs.

“International benchmarks remain useful reference points, but they should not be applied mechanically where domestic refiners also bear significant transportation, evacuation and other costs,” the association said.

It proposed that factors such as crude quality, delivery point, avoided international freight and insurance costs, domestic evacuation expenses, proximity to producing fields and reasonable producer margins should be considered in determining crude prices for local refiners.

The association also expressed concern over the resurgence of petroleum product imports, warning that excessive reliance on imported products could weaken investment in domestic refining, increase pressure on foreign exchange and expose the country to international freight and geopolitical disruptions.

“Imports may be necessary to cover temporary supply gaps, but they should not become the default solution at the expense of domestic refining capacity,” CORAN warned.

On financing, the association proposed the establishment of a Refinery Development and Expansion Financing Framework involving development finance institutions, commercial banks, pension funds, infrastructure funds and private investors.

According to CORAN, such a framework could provide long-term financing, guarantees, refinancing arrangements and structured funding to support the construction of new refineries and expansion of existing facilities.

The association also urged the government to invest in infrastructure critical to the refining industry, including pipelines, storage terminals, depots, rail-linked transportation systems and marine evacuation facilities.

“Road transportation adds substantial costs to refinery operations, while also increasing pressure on roads and exposing the country to accident risks,” it stated.

CORAN maintained that refineries should be treated as strategic industrial infrastructure capable of generating employment and stimulating activities across engineering, fabrication, transportation, petrochemicals, lubricants, plastics and construction.

It proposed the development of an integrated refining ecosystem comprising large, medium-sized and modular refineries located close to crude-producing areas and major consumption centres.

The association said the proposed Presidential Roundtable should bring together CORAN, the Nigerian Upstream Regulatory Commission (NUPRC), the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), NNPC Limited, crude producers, financial institutions, infrastructure investors and relevant government ministries.

According to CORAN, the meeting should produce clear timelines for implementing the Naira-for-Crude policy, developing a domestic crude-pricing framework, strengthening the Domestic Crude Supply Obligation, reviewing crude swaps and reducing dependence on petroleum product imports.

It also called for measures to improve access to long-term financing, develop shared infrastructure, establish strategic product reserves and support refinery expansion as part of a comprehensive national refining roadmap.

CORAN said the objective should be to move Nigeria from an import-dependent petroleum economy to a production-driven system in which Nigerian crude supplies Nigerian refineries, while positioning the country to become a major refining hub for Africa.

“Nigeria’s crude should power Nigerian refineries, support domestic supply and create the foundation for the country to emerge as a refining hub for Africa,” the association said.