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 the Honorable Minister. During the Presentation of 20 Years Transmission Expansion Master Plan for TCN on 30 January 2018

When the Buhari administration was inaugurated in 2015, the story of Transmission Company of Nigeria (TCN) was the story of a lack of capacity to transport generated power.

With or without verification, the popular view was that TCN had only a rigid capacity to transport 5,000 MW of energy and no more.

With a mandate to improve TCN’s capacity, supported by appropriate policy approvals from Mr. President and budgetary support, that story is changing.

The budgetary support has been most helpful; first in enabling TCN to pay warehouse and shipping companies to recover over 500 containers of goods and equipment left at the port for many years before the Buhari administration.

Secondly these containers and the equipment are now regularly being transported to TCN sites and substations to restart and complete transmission projects that had stalled for years.

TCN’s capacity to transport energy has steadily but surely grown to 7,125 MW as at December 2017.

With more projects heading towards completion in 2018 and beyond, this capacity will increase.

But increased capacity is not the real story.

The real story is that the increase is now orderly, logical, and targeted to address, as a priority, locations where there is existing power or incoming power.

This will ensure that in due course we do not have stories of stranded power again in our conversations about energy production and supply.

Ladies and gentlemen, this is the background that makes today a milestone day in our journey of incremental power, aiming to achieve steady power, and ultimately deliver uninterrupted power.

We gather to receive the 20-year Transmission Expansion Master Plan by Fichtner and participate in a workshop which would enable stakeholders the opportunity to review and improve the report.

With the completion of the 20-year Transmission Expansion Plan, the era of trial and error in the transmission expansion program will be over.

I accepted to open this workshop based on my conviction that the report will clearly bring out the future development of improved power system delivery in Nigeria for the next 20 years; starting from gas supply through the other power supply value chain.

The development of the master plan started in 2016. The objective of the studies is to complement the transmission rehabilitation and expansion program and power sector recovery plan by establishing the long-term generation and transmission plan that meets the forecasted national electricity demand at the lowest economic cost.

I therefore urge the CEOs of all generator and distribution companies to work closely with TCN to ensure that the outcome of the report is carefully reviewed and practical implementation should commence after obtaining formal approval from the relevant agencies.

The NERC and NBET are implored to key into the master plan when procuring additional generation, while the Discos should follow the Transmission plan for developing their own distribution master plan.

This is a new dawn for order and methods in the process of solving the power problem.

On behalf of the President, the Federal Government of Nigeria, I accept this report and commit that our team will do our best to implement its recommendations for the benefit of our people.

Thank you for your attention.

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