The commercial investment in tank farms and other storage facilities across the country is looking like a miscalculated business venture for owners who procured loans from commercial banks to set them up, following federal government’s determination to end the importation of refined petroleum products into the country by 2019, Leadership reports.
A recent policy of the federal government on deregulation of the downstream oil industry made it possible for oil marketers to import and warehouse petroleum products in tank farms for storage and resale. However many of such tank farms, numbering about 83, may become redundant by 2019. There may not be much need for them as new refineries, like Dangote’s, with capacity of about 150,000 barrels a day, may be enough to service local demand.
The managing director, Nigerian Petroleum Marketing Company (NPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), Mr. Umar Ajiya, said except operators of the facilities begin to think about backward integration, their investments would be wasted. In his reaction, the executive secretary, Depot and Petroleum Products Marketers Association (DAPPMA), Mr. Olufemi Adewole also admitted that the exit from importation of petroleum products will certainly put some tank farms out of business.
The Head of energy research at Ecobank, Dolapo Oni, however, allayed fears expressed by some tank farm operators on the possible redundancy of their facilities, saying that much as in-country petroleum products refining will improve in 2019, as envisaged by the government, the storage business would still be encouraged as output from upcoming refineries cannot be exhausted on a daily basis.