FG Approves Local Production Of Bitumen To Boost Job Creation, Conservation Of Foreign Exchange

* Directs Ministries of Petroleum Resources, Mines and Steel to develop strategies to enhance, stimulate, and encourage local production
* Fashola calls on entrepreneurs to tap into the production of bitumen locally as he presents Memorandum on  Initiative to FEC
* “We see a demand of 500,000 metric tonnes of bitumen locally per annum,” he says
* Local production is also expected to generate no less than 30, 000 jobs for the unemployed in the country

Local and foreign investors with focus on the immense opportunities in the production of Bitumen in the country have received further boost with the Federal Government approval of investment by manufacturers, in the local production of bitumen and other construction materials that are being imported currently for construction of roads across the country.

The Federal Executive Council (FEC), which gave the approvals sequel to a memorandum presented to it by the Minister of Works and Housing, Mr. Babatunde Fashola SAN, also directed the Ministries of Petroleum Resources and Mines and Steel to develop strategies to enhance, stimulate and encourage local production.

The memo, which originated from an initiative of President Muhammadu Buhari, who had made inquiry about the sources of the major components in Road Construction and the possibility of producing them locally, will boost job creation and preserve foreign exchange.

In the Policy Memorandum titled “Approval For The Local Production Of Bitumen And Other Construction Materials In Nigeria”, Fashola, who drew the attention of Council to the fact that bitumen and other major road construction materials were currently being imported, submitted that when produced locally bitumen was expected to be sold at about N125, 000 per metric tonne, which, according to him, is 48. 8 per cent of the cost of the imported one which stands at N285, 000.

Also, according to him, in terms of job creation, producing bitumen locally would, aside reducing the cost of road construction significantly and other benefits earlier mentioned, would also generate no less than 30, 000 jobs for the unemployed in the country.

The Minister informed the Council that the Policy Memo which, was meant to stimulate local production of bitumen as a component of road construction, was an initiative of President Muhammadu Buhari, adding that the President has accordingly challenged the Kaduna Refinery and Petrochemical Company to key into the policy by collaborating with related agencies of government to realize the goal.

Noting that, in buying bitumen at such reduced price, the nation would be saving 56.2 per cent of the cost of importation, the Minister also argued that aside boosting the nation’s construction capacity, the local manufacture would also create thousands of jobs for Nigerians adding that the product, which he described as “a low grade crude oil which is either extracted from the ground or gotten as a by-product of refined crude oil”, has an estimated 38 billion barrels of reserve and extra heavy oils that have remained untapped for years across the country but especially in Ondo, Lagos and Edo States.

Also drawing the attention of Council to the fact that the Kaduna Refinery and Petrochemical Company (KRPC) is the only refinery in the country that has the capacity to produce bitumen deposits, Fashola pointed out that with current installed capacity of 1, 796 metric tonnes per day, well above the present annual local consumption which, according to him, stands at 500, 000 metric tonnes, the company could produce bitumen to satisfy the nation’s requirement and even for export, adding, however, that to achieve that the company has to function at full capacity.

Some of the advantages derivable from the local production of bitumen and other construction materials, the Minister said, also include the diversification of the nation’s economy, improvement in technological growth, establishment of contracts vital for international cooperation in the new expanding technology and socio-economic impact on the areas of operation, among others.

According to him, local production would also help to maintain quality control on production through the Standard Organization of Nigeria (SON) and related Consumer Protection Agencies to ensure that the right quality of bitumen is produced for use by the construction companies while also ensuring further diversification of the nation’s economy.

Assuring investors wishing to invest in the local production of bitumen of government patronage and encouragement, Fashola said local production would also free the foreign exchange currently being expended on the importation of the commodity for other socio-economic needs of the country.

“It will preserve local jobs and also create thousands more that are currently being created in countries from where we import the commodity”, the Minister said adding that the envisaged employment boost, especially in transportation haulage was in line with the President’s projection of lifting 100 million Nigerians from poverty’ and his mandate, “to use what we produce and produce what we need”.

In order to implement the initiative, he recommended that the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation (NNPC) and the Kaduna Refinery and Petrochemical Company should come up with strategies and requirements that would enable the KRPC to resume the production of bitumen at its plant.

Assuring the Council that President Buhari has directed the reconstitution of the Bitumen Committee for auctioning of the Bitumen Blocks while the Nigerian Geological Survey Agency (NGSA).is also engaged in exploration of more blocks, the Minister informed Council with delight that upon reviewing the Memorandum, the Minister of Mines and Steel Development had already given his “No Objection” to the position of the Ministry of Works and Housing on the need for local production of bitumen to reduce cost of road construction.

Aside bitumen, Fashola also sought the improved local production of other essential road construction materials such as cement, crushed rock and steel explaining that while cement constitutes the major component of reinforced concrete utilized in the construction of bridges, drains, culverts and rigid pavement, crushed rock is used as the base course to give road pavement the desired load bearing strength while steel is utilized as reinforcements in the construction of drains, culverts, bridges and other hydraulic structures on roads.

In inviting the Council to approve the Memorandum, the Minister noted that there was need to encourage local production of essential construction materials in the country to reduce the cost of road construction, create employment and stimulate growth adding that the spiral increase in the cost of construction materials over the years has resulted in the rise of road construction cost and led to repeated requests for augmentation of ongoing contract sums.

He said while efforts were on to revamp the Ajaokuta Steel Complex to achieve full local production, the required quantity of bitumen for construction of roads across the country are being imported because the Kaduna Refinery and Petrochemical Company had stopped the production of bitumen since 2017 adding that road construction utilizes major part of the average 500, 000 metric tonnes of the product made locally when it was still in production.

Stressing the importance of bitumen in road construction, Fashola declared, “Bitumen is used at almost all levels of road construction, from sub grade, sub base, base course and asphaltic course (Binder and Wearing)”, reiterating that the lack of the product contributes significantly to the high cost of road projects in the country.

Speaking to newsmen later on the approvals, Fashola, who also disclosed government’s intention “to give encouragement and support to all those who take up the opportunity of manufacturing bitumen”, said the Kaduna Refinery and Petrochemical Company was expected to also raise its game by participating in the production sub-sector of hydro-carbon industry, adding, “We expect that it will improve the quality of bitumen that is produced and goes into our road construction just as we are now able to control the quality of cement that goes into local construction”.

“We are also promoting the use of more cement, stones, and rocks in road construction”, the Minister said adding that his Ministry was now developing a design manual of rock and stone used in road construction in the country which, according to him, formed the framework of the policy documentations that he presented to Council and which were approved.

“So, we expect the Nigerian entrepreneurial community to now respond to all of the existing government policies for setting up businesses and embracing this policy as part of ways to develop our made-in-Nigeria capacity”, Fashola said.

Remarks By Babatunde Raji Fashola, SAN At The 23rd Monthly Power Sector Operators Meeting Held In Lafia, Nasarawa State, Monday 8th January, 2018

I will like to start this my remarks by highlighting the Progress and milestones on our journey for incremental power which reassure us that we are on the right path and inspire us to continue with more belief.

Those milestones are represented by:
a. Generated power has gone up to 7000 MW in 2017 from 3,000  MW in May 2015
b. Transmission Capacity at 6900MW in 2017 from  about 5,000  MW in May 2015
c. Peak Distribution now averaging 5,000 MW in 2017 from 2,690MW in 2015.

That said I will like to thank all of you for your contributions towards these milestones.

The reason I thank you is because you are impacting the lives of Nigerians, you are saving them money and changing their lifestyles for the better.

They tell me that their consumption of diesel and petrol to run generators for power has reduced and the hours they run their generators has gradually reduced.

This is the result of incremental power and we must get more of it.

They also tell me that they are now monitoring how they use power and are turning off appliances that are not needed.

Although this is meant to save costs, it also conserves energy, reduces waste and supports incremental power.

In the last 3 months we have increased the supply of power in the dry weather and people’s experience with power was better.

We must thank the Ministry of Petroleum  Resources for the increase in gas supply .

The cynics who used to say that it is only during the rains that power improves now see that what we have done is no fluke.

Apart from Gas other stakeholders are also taking commendable steps.

A few months ago the Nigerian Electricity Regulatory Commission (NERC) formally presented the Mini Grid Regulations at this meeting and its impact is beginning to manifest.

Last month in Abuja, Nigeria through the Rural Electrification Agency  hosted a Mini Grids Summit that is the largest ever attended in Africa with 600 participants from about 40 Countries.

The word is spreading around the world as mini grids will help us connect more people and boost incremental power.

We are also putting together a policy position to help expand the distribution network of the DisCos and use this to distribute the 2000MW that is currently available but cannot be distributed.

I also use the opportunity to call out to Manufacurers to let us know where they are, how much power they need, and how we can connect you because we have 2000 MW of undistributed power.

This year we should work harder to increase our people’s access to meters and reduce the incidents of estimated billing as NERC concludes the Meter Regulations that will open up the meters supply and installation business.

In the first few days of the new year we suffered a set back to our power supply which was caused by damage to the gas supply network around Okada.

First, I want to repeat that gas is the fuel that most of the generation companies use to produce electricity and all of us have a stake in ensuring that they are not damaged.

Secondly, I am happy to inform Nigerians that as at last night the Nigerian National Petroleum Corporation (NNPC) informed us that repairs have been completed. We thank and commend them for their response.

Thirdly, what remains is to test the lines and restore pressure and supply to the generation companies.

One by one all the stakeholders from GenCos, TCN and DisCos will work to restore supply to the levels they were before the pipeline damage.

From there we will continue our journey of incremental power.

I wish you all a happy new year.

Babatunde Raji Fashola, SAN
Honourable Minister of Power, Works and Housing

8th January 2018