Lubricant sector can employ 50, 000 more – Manufacturers

IKEJA, Nigeria - Aug. 22, 2014 - PRLog -- With the right business environment, Nigeria’s lubricant industry can employ 45, 000 more people than it currently does, the manufacturers say.

The manufacturers made this known at the first Nigerian Lubricants Industry summit titled “Nigerian Lubricants Industry: Opportunities and challenges”, which held in Lagos on Tuesday.

The industry currently employs 5, 000 people.

The lubricant manufacturers called on the government to re-stream and approve the existing base-oil unit at the Kaduna refinery and petrochemical plant for new refineries to use the heavy crude oil sand reserves for 100 per cent sourcing of base oil.

The cumulative asset base of the blending plants is about N20 billion, generating about N45 billion profit margin in 2013, employing over 5000 Nigerian workers but with a potential to generate over 50, 000 additional workforce if plants are working at full installed capacities.

Other factors hindering the progress of the sub-sector includes the persistent infractions such as indiscriminate importation of sub-standard products, adulteration of lubricants by illegal lubricants blending plants and the inability of the government to effectively curtail the illegal plants and products are threatening the survival of the market, lubricant manufacturers have said.

“Nigerian lubricants market is awash with about 720, 000 metric tonnes of base oils (240, 000 metric tonnes in excess of local requirement for lubes blending), different grades and types of products locally blended by the majors, independent, fake and illegal manufacturers, adulteration of lubes by illegal lube blending plants, open market of base oil erroneously displayed as finished lubricants,” Kayode Sote, an Engineer and Principal partner, Lube Services Associates, said.

He said the Nigerian Lubricant market is also a dumping ground for substandard and off specifications imported lubricants of questionable quality, adding that “There is an indiscriminate importation of base oils far in excess of the installed capacity of the operating and functional lube oil blending plants”.

Mr. Sote also highlighted that the open market being run by the industry attracts and encourages the importation of finished lubricants of questionable quality and standards from the far East countries.

“All these infractions are indeed a threat to the survival of the lube manufacturers in Nigeria. Necessary awareness should be created at a stakeholders’ forum in order to draw the attention of the government, its statutory agencies, public and industrial consumers alike to the challenges in the lubricant market,” he said.

He called for a review of the aspects of the nation’s laws that deal with the purchase, storage and sales of lubricants. He also pushed that packaging should be standardised to avoid arbitrary price war.

Jani Ibrahim, an engineer and Chairman, Lubcon Group, said for sustainable growth of the industry, the government must eliminate artificial and avoidable distortions of people producing substandard products, reduce import tariffs, implement sound fiscal and stable monetary policies and maintain stable and lower interest rate regimes.

He also pushed for the speedy passage of the Petroleum Industry Bill, PIB. “We should embrace global mind-set to avoid being left behind. Nigeria should add value to her hydrocarbon reserves. Our citizens must not suffer due to poor policies. The Nigerian market is a huge market. There is need to ensure the right attention is paid to it,” Mr. Ibrahim said.

The lubricants sub-sector of Nigeria’s petroleum industry is the salient but core area of the downstream industry that is complementary to the fuel business. They are technology-driven products with the value-addition to one of the refined by-products of crude oil called base oils. Lubricants are necessary products to guarantee energy-savings, cost-effective maintenance of auto-motives, plant machinery and equipment in order to sustain the nation’s industrial growth. According to the Department of Petroleum Resources, DPR, there are about 37 independent plants licensed to operate.

Available statistics reveal these registered blending plants have enough installed capacity to meet the local consumption of lubricants and with potential for export to earn foreign exchange. However, it is estimated that 85 per cent of the total need of lubricating oils is produced locally while the remaining 15 per cent are specialised products imported by marketing companies into the country.

The objective of the two day summit, along with other aims, is to promote a better understanding and appreciation of the nation’s hydrocarbon reserves, potential and diversified investment opportunities therein and to have an overview of the nation’s oil and gas industry with emphasis on the relevant statutory requirements.