Government approves $3 billion for oil refinery construction
Revealing the potential benefits of the ambitious project to the country, leading economist from University of Juba, said government must address security and logistical issues to realize project’s viability
By James Chatim
TheCouncil of Ministers, in its regular meeting on Friday approved $3 billion for the construction of a new larger oil refinery facility in Tharjath to complement the existing smaller refinery in Unity State.
Hon. Michael Makuei Lueth, the Government Spokesperson and Minister of Information said that the construction of the new refinery facility will be undertaken by NILEPET, with 30 percent and the private company Quad Layer with the other 70 percent.
Speaking to The City Review exclusively, Akol Maduok, an Economist at the University of Juba said the idea by the government to construct an oil refinery is constructive and could reduce the economic hardship that the citizens are going through.
“I think it is a very good intention from the government to have a local refinery. But what we don’t know is where would the government or who would accept to invest $3 billion in this wartime economy. Because for you to have a local refinery, you also need to consider the security aspect of it,” he said.
“You also need to consider the road infrastructure. Now, from Tharjath, is it connected to the other states? Is it connected to the region? Greater Bahr el Ghazal, Malakal is it connected to this part of the county?” he asked.
However, he said if the government could address all these challenges the project would be of great benefit.
“I think that would be good. It has a lot of benefits in the local economy,” Maduok stated.
“Generally, it is a good idea, but we fear that maybe they may not manage to get some money to construct that refinery. But if they get money, there is no problem. If they get an investor, who is willing to invest in that,” he added.
However, the government has not provided the details regarding the refinery’s pace of time and its capacity.
“While an existing refinery operates in Tharjiath, its capacity is limited, and inadequate road connectivity hampers the transportation of refined products to the market,” Makuei told the media after the council of ministers meeting.
According to Makuei, the new refinery aims to meet the fuel consumption needs of South Sudan and its construction will be financed through a public-private partnership.
Nilepet, or Nile Petroleum Corporation, South Sudan’s national oil and Gas Company, will hold a 30 percent stake in the new refinery, Makuei said.
He said the Quad Layer Holdings will hold a 70 percent stake that will be responsible for constructing roads to connect the refinery to markets, ensuring efficient fuel distribution.
The two contracted companies will finance the entire project, and the government will reimburse their investment after the refinery begins production.
The information minister highlighted that after approval of the project by the government, it will be followed by feasibility studies to determine the capacity of the refinery before the contract is signed.