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.

Text Delivered By H.E, Babatunde Raji Fashola, SAN At The Commissioning Of Woodhill Estate Under Akacare Cooperatives, And Flag-Off Of Cooperative Housing Development, Kuje, FCT, Abuja

Welcome one and all to the commissioning of Woodhill Estate of AKACARE Cooperative Housing Scheme and the flag-off of our cooperative housing initiative, one of the series that will happen in each of the six (6) geo-political zones of Nigeria and the Federal Capital Territory.

One of the NEXT LEVEL commitments of the Federal Government of Nigeria as declared by President Buhari at the ministerial retreat held in September 2019, is to deepen access of Nigerians to affordable housing and consumer credit.

This is a mandate item of the housing sector of the Ministry of Works and Housing; as the policymaking arm of government, and we have assigned the Federal Mortgage Bank of Nigeria (FMBN) a parastatal of the Ministry of Works and Housing, the implementation responsibility for executing our policy of PARTNERSHIPS with cooperatives.

For those who may wonder, why cooperatives? The answer is simple.

By definition, co-operatives are "an autonomous association of persons united VOLUNTARILY to meet their common economic, social and cultural needs and aspirations through a jointly-owned enterprise.”

The key word in that definition is the "voluntary" nature of cooperatives, and this is critical in the formulation of our policy of partnerships with cooperatives as a means of overcoming the problems of "Acceptability" and affordability that stand in the way of access to housing.

This is important because our experiences, our investigations and our observations reveal starkly that there are hundreds of thousands of empty and unoccupied houses in major cities across Nigeria.

They are empty and unoccupied because they are either over-built, in being too big, or under-built in being too small and therefore not acceptable to those who need them, because in many instances no consultation took place between the builders and the consumers they built for.

This is why we are undertaking a pilot scheme based on our studies to build in 34 states who provided land, what the people we consulted said they will find acceptable.

Because of the lack of consultation and acceptability problem, the problem of affordability creeps in.

Our policy development team finds the voluntary nature of cooperatives very useful because members will be expected to design and build according to their needs and their income, as they find affordable.

Co-operatives have traditionally proved to be successful in areas like transportation, agriculture, trade and commerce, market associations and amongst large groups in the informal sector.

It is these large members of the informal sector that we seek to reach, scale up constructions of houses and the multiplier effects on the economy for cottage industries who make building materials like paint, doors, roofing materials, nails, and electrical fittings to mention a few.

The scale of construction by voluntary associations is expected to ramp up employment and income for artisans who will build houses. This will be our contribution to President Buhari’s commitment to raise a hundred million out of poverty in a decade.

As in other sectors, when cooperatives have been successful, we can point to modest successes of partnerships by FMBN with some cooperatives in the formal sector that currently has 52 housing projects under construction to deliver 4,624 units in 2020.

It is this number, that the policy we flag-off today seeks to multiply in many fold by unleashing the power of cooperatives and empower their voluntary will to act together in pursuit of the common desire to access housing and credit.

In order to be eligible, cooperatives must be registered, they must acquire their own land, get title to it, seek and obtain a building permit from the governments of the respective states where their land is located.

This last requirement is instructive because it seeks to eliminate incidents of unapproved buildings and slums which governments later seek to demolish.

All the state government agencies in charge of land have been duly briefed at the National Council launch meeting held in Abuja on November 7th 2019.

The Mandate and the role of the FMBN is to then provide construction funding to the cooperatives to build the houses, and to provide mortgage finance to the individual members to buy the house and pay back in instalments at a rate not exceeding 10% per annum.

Ladies and gentlemen, this is the sum and substance of the policy and partnerships that bring us to Kuje, in the FCT today because AKACARE cooperative has embraced this NEXT LEVEL initiative to deepen access to housing and consumer credit.

It is therefore my honour and pleasure to flag off this cooperative partnership in the hope that it will quickly spread to other states in this Geo political zone.

As every cooperative chooses what it desires and can afford, the FMBN, representing the Federal Government of Nigeria will be your partner, providing financial support to enable you to act voluntarily to choose and build what you accept and your income can afford.

On behalf of President Muhammadu Buhari and the Federal Government of Nigeria, I commission this Housing Estate and flag off this co-operative development away from poverty and towards common prosperity.

Thank You.

Babatunde Raji Fashola, SAN
Honourable Minister of Works and Housing