Nigeria National Petroleum Corporation (NNPC) said it plans to build a lubricant blending plant in Kaduna and in Lagos states to take care of the needs of consumers of lubricants in the Northern and Southern parts of the country respectively, according to a recent news article in the Daily Independent based in Lagos, Nigeria.
In order to enter the lubricants market in the shortest possible time, NNPC opted for a contract blending of its own branded lubricants for the short term. Under this agreement, NNPC will have ownership of its lubricant formulations and customized packaging materials.
The Managing Director of NNPC retail business, Mr. Chris Osariewete, dropped the hint in Lagos during the recent Nigeria Lubricant Summit organized by CMC Connect Perception Managers in collaboration with the Department of Petroleum Resources (DPR).
Kaduna Refining & Petrochemical Company (KRPC), part of NNPC, previously operated a 4,500 bpd lube base oil plant, commissioned in 1983, which was the first of its kind in West Africa and one of the largest in Africa. The unit broke down twenty years ago and has been idle ever since.
Osariewete enumerated the challenges in the sub-sector to include; unavailability of base oils locally and the resultant expensive import arising from skyrocketing exchange rates, high demurrage charges due to port delays, abandoned and unlicensed lubricants blending plants nationwide. Others are proliferation of sub-standard (low quality or off spec) lubricants, which led to the government ban on bulk lube sales at the retail outlets, nationwide, rampant retailing of unbranded lubricants in doubtful measures and packaging by unauthorized persons as well as product counterfeiting.
In spite of the above challenges, there are a lot of opportunities for Nigeria in lubricants market. There is still a big gap in the supply of quality lubricants to filling stations particularly outside the major cities and this compels consumers to buy what is available (low quality oils), he added.
He further said that the NNPC subsidiaries and contractors can also be major customers for the lubricants, adding that the distribution/ marketing to industrial locations will be done through reinforced vibrant and motivated bulk sales team.
He listed the benefits of participating in the lubricants market as improved viability of existing outlets and better payback period. Lubricants have higher unit margins, hence improved earnings for dealers, expanded revenue base for NNPC, increased participation in the oil and gas sector
The Managing Director of CMC Connect and Perception Managers Mr. Yemi Badejo in his contributions at the event, noted that the investment profile in the lube subsector stood at N700 (US$4.3) billion with annual growth rate of 5 per cent.
