The lubricant sector represents one area of growth for Nigeria, according to Alphonsus Mudei, who represented the Director of the Department of Petroleum Resources, the sectors regulating agency, at the First Nigerian Lubricant Summit. He noted that there are now 37 licensed independent blenders in Nigeria, and seven others are awaiting approval.

Kayode Sote, principal consultant for Lube Services Associates, said that Nigeria is the third largest market for lubricating oils in Africa, consuming about 600 million liters per year. According to Sote, the Nigerian lubricants market had gross earnings of N150 billion [2.9 billion] in 2013. Registered blending plants in the country have a total installed capacity of about 965 million liters per year, and they are currently producing at a cumulative average of 45 percent of capacity.

The cumulative asset base of the blending plants is about N20 billion [95 million], and they generated about N45 billion [214 million] in net profits in 2013, Sote added. The sector employs more than 5,000 workers but has the potential to generate more than 50,000 additional jobs if the plants work at their full, installed capacities.

Waste Oil Is Top Concern

Aminu Jalal, director general of the National Automotive Council, set the tone for deliberations when he told attendees that waste oil is just thrown away and feeds into streams, rivers and water supplies. I hope this summit will discuss how to handle waste lubricating oils, he said in challenging the attendees.

However, Thomas Olawore, executive secretary of the Major Oil Marketers Association of Nigeria, said that for stakeholders to invest in recycled oil ventures, the government must provide guidance. We need the Department of Petroleum Resources to roll out a clear-cut policy on recycled waste oils so that investors can feel confident investing in that subsector. The policy has to be attractive to investors and stakeholders alike, he added.

Emeka Obidike, executive secretary of the Lubricants Producers Association of Nigeria (Lupan), agreed that the government needs to provide direction. We [producers] should be leading investment in oil recycling, but we need support from the government to provide an institutional framework. We will make the investment, but the government has to support us in a kind of partnership, he said.

John Erinne, CEO of Matrix Petrochemical, a Lagos-based company, concurred. There must be institutional involvement for used oil collection to work in Nigeria. This involvement will provide structure so that investors can feel it is safe to put their money in the subsector, he argued.

Taiye Williams, managing director of Lubcon International, proposed that stakeholders adopt the South African model, where a foundation supported by lubricant marketers collects, stores and recycles used oil. On the other hand, Mary-Jane Adeeko of Frals Testing and Consulting Services Ltd. said no money should be spent on reclaiming used lubricating oils until universities conduct research so that investors can invest in the subsector when there is a breakthrough.

Saving the Environment

Nigerias environment is suffering from the indiscriminate disposal of used lubricating oil. Patches of used oil are a common sight on the ground around auto workshops across the country. Adeeko lamented that used oils pose a grave hazard to the environment because they contain heavy metals, various chemicals and oxidation products that can harm farm produce.

In their 2004 Pilot Study of Used Oils in Nigeria, Professors O. A. Bamiro and O. Osibanjo of the
University of Ibadan, Oyo State, noted that Nigeria has little or no organized disposal practices. The report, sponsored by the Secretariat of the Basel Convention, stated, Disposal methods varied from indiscriminate dumping on land and pouring down sewers to storage in plastic containers like kegs, jerry cans and drums where they were left until a use was found for them. Or they were eventually sold to dealers or direct users.

The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal was adopted in 1989 by the Conference of Plenipotentiaries in Basel, Switzerland, in response to public outcry following the discovery in the 1980s of deposits of imported toxic wastes across Africa and other parts of the developing world.

The 2004 Pilot Study found that service stations and what are known as mechanic villages generate the most used oil. Old cars, of which there are many in Nigeria, are serviced more frequently, the report stated, [which] ordinarily should lead to the generation of considerable used oil. But, the economic situation in Nigeria dictates otherwise, [and] some car owners resort to utilizing used oils during oil changes as opposed to virgin oil.

Prices for used oils varied considerably from N20 to N100 (0.1 to 0.50) per gallon with the variation based on quality. Most of the buyers were individuals and transporters.

The report also noted that the additives in used oils are physically and chemically changed, and the oil itself is contaminated with rust, soot, dirt, dust, lead, engine wear metal particles and water. These contaminants are hazardous to humans, the report warned.

Thirty-five dealers were surveyed during the study, and 95 percent of them admitted they considered dealing in used oil to be a lucrative business. Some dealers claimed to be grading their used oils on the basis of source while the others did not feel the need to grade, according to the report. One dealer did not see the need for grading because used oil is used oil. In any case, he was selling to less discerning clients such as those using the oil as wood treatment and antirust coatings.

Most of the dealers stored their oils in metal drums and plastic containers, which led to a high degree of spillage and environmental pollution.

Applications for used oils identified by the survey include:

• Direct re-use as engine lubricant
• Fuel for boilers and furnaces
• Hair cream production
• Dust suppressor
• Gear oils
• Hydraulic oils
• Weed killer
• Lubrication for block making molds
• Wood preservative
• Antirust coating for metallic surfaces

Lube Services Sote told the Lubricants Summit, The handling and disposal of used engine oil is a widespread source of environmental degradation and ecological damage in Nigeria. He emphasized that used and waste oil disposal should be properly monitored to avoid continued environmental pollution. Sote said, Lubricant blenders should be encouraged to set up reclamation and reprocessing plants to recover high quality base oils to be used to blend new lubricants.

The study by Bamiro and Osibanjo identified the industries generating the most used oil as manufacturing such as the beverage industry, breweries and food processing; and transportation including cars, buses, motorcycles, heavy-duty trucks and off-highway equipment. The report analyzed the level of used oil generated based on total vehicle registrations in the country as of November 2004. Used oil generation was estimated to be 200 million liters per year, they said. The oils are put to several uses, from direct reuse to bizarre applications such as additives to hair cream.

While stakeholders contemplate huge investments in Nigerias used oil market, there already are a few marginal players in the sector. As noted in Bamiro and Osibanjos study, Of significance is the existence of dealers who collect used oils from diverse sources for sale. However, reprocessing by such dealers is very rare and is limited to allowing particulate matter to settle out, boiling to remove entrained water and mixing with grease to produce gear oil.

Base Oil Production

Summit attendees also deliberated the need for local production of base oils to reduce huge expenditures on imports. In addition, Nigerian lubricant blenders are said to import excess base oil to the country that often finds its way into the hands of fuel adulterators.

Joseph Odumodu, director general of the Standards Organization of Nigeria, said, The latest statistics indicate that at least 300 million liters of base oils is imported annually to the country for lubricant production, while the total blending capacity utilization nationwide is about 240 million liters. This leaves a surplus of 60 million liters that is diverted to other uses.

Lube Services Sote agreed that the Nigerian lubes market is awash in about 720,000 metric tons of base oils, which exceeds local requirement for lubricant blending by 240,000 metric tons. However, Adeyinka Akinbami, general manager of Ascon Oil Co. Ltd., said the problem of base oils in Nigeria would have been a thing of the past had the Kaduna refinery been functional. The refinery section that produces base oils burned in 1993, and the country has not produced base oils since that time, he said.

Sote, who noted that Nigeria spends U.S. $400 million (310 million) annually on base oil imports, said bitumen could be used to produce base oils, but government policies have not encouraged its use. Nigeria boasts 40 billion tons of bitumen reserves, second only to Venezuela in the world, but only the government can make it work, he said

Olusegun Aganga, Minister for Trade and Investments, said that government is already exploring the process of producing base oils from bitumen. The government wants to open new opportunities in the exploitation of bituminous tar as an alternative source of base oil in Nigeria, to stem the huge amount of foreign exchange losses associated with importing the product, said Aganga. A lot of private sector investment is required for this to happen.

Unified Standards Needed

Another proposal by attendees was a unified body to improve standards and meet the demands of original equipment manufacturers (OEMs). Lubcons Williams said that there is need for a specific office to handle lubricant testing because the Standards Organization of Nigeria is busy handling other business sectors.

The unified body would be involved in testing base oils coming into the country as well as finished lubes. It could also work with OEMs and blenders to run engine field tests in the country, Williams suggested.

Minister Aganga told stakeholders that the many challenges facing the industry will be a thing of the past when the draft national policy for the lubricant industry, a component of the recently launched Nigerian Industrial Revolution Plan, takes effect. The policy is primarily aimed at increasing value and capacity utilization in the industry. Its objective is to make the country self-sufficient in lubricant production and to encourage exports, he concluded.