Minister of State for Petroleum Sources Timipre Sylva on Wednesday introduced the plan to breathe life into the Port Harcourt Refinery, a improvement, which when realised, will assist the nation cut back importation of gasoline, tackle gasoline value hike and provides extra money to the financial system. ROBERT EGBE writes
The Federal Government Council (FEC) on Wednesday permitted $1.5 billion for the rehabilitation of the nation’s largest refining firm, the Port Harcourt Refinery.
Minister of State for Petroleum Sources Chief Timipre Sylva introduced the federal government’s decison to State Home Correspondents after the weekly digital FEC assembly, presided over by President Muhammadu Buhari on the Aso Rock Presidential Villa, Abuja.
Business watchers had been anticipating the transfer for months. It is because the federal authorities, for some years, had been determined to repair its refineries, which have been shut down for repairs since April 2020, pending rehabilitation.
Within the course of, the refineries misplaced some 167 billion naira a 12 months.
The Nigerian Nationwide Petroleum Company (NNPC) stated final 12 months that it anticipated them to function at round 90 per cent of capability when repairs are accomplished and so they resume manufacturing by 2023.
Within the meantime, the refineries operated sporadically as a result of years of neglect, forcing Nigeria to rely closely on imports to meets its home gasoline wants.
Nigeria, Africa’s main crude exporter, imports round 1 million-1.25 million mt/month of petrol to fulfill nationwide demand estimated at round 50 million-60 million litres/day.
The federal government’s haste to revamp the refineries additionally adopted a report final June that three of Nigeria’s 4 refineries gulped N1.64 trillion in cumulative losses recorded of their operations since 2014.
This was revealed within the first-ever audited accounts and monetary statements of the businesses printed by the NNPC.
Two of those refineries are the 210,000 barrels per day capability Port Harcourt Refining and Petrochemical Firm Restricted and 110,000 barrels per day Kaduna Refining and Petrochemical Firm Restricted.
The audit reviews confirmed that mixed losses from the 2 refineries had been N208.6 billion in 2014; N252.8 billion in 2015; N290.6 billion in 2016; N412 billion in 2017, and N475 billion in 2018.
The five-year audited account particulars for 125,000 barrels per day Warri Refining and Petrochemical Firm Restricted had been, nevertheless, faraway from the printed particulars by the NNPC.
Current makes an attempt to rehabilitate the refineries had been deserted after the NNPC did not safe the required funding.
The Nation gathered that determined to halt the loses, the federal government started talks on securing the wanted mortgage final 12 months.
On December 1, 2020, NNPC introduced that it obtained seven bids from submitted by native and worldwide firms for EPC contract award for the repairs.
The profitable negotiations of the funding association, led by African Export-Import Financial institution, or Afreximbank, paved approach for the NNPC to maneuver to the business stage of pre-qualifying bids submitted by native and worldwide firms for the engineering, procurement and building (EPC) contract award for the rehabilitation of 210,000 b/d Port Harcourt refinery.
In line with Sylva, the rehabilitation will probably be carried out in three phases of 18, 24 and 44 months, including that the contract was awarded to an Italian firm, Tecnimont S.p.A, a worldwide chief in refinery upkeep.
He stated the funding has three elements from Nigerian Nationwide Petroleum Company (NNPC) Internally Generated Income (IGR), budgetary allocations provisions and Afreximbank.
The minister additionally assured that native content material is totally concerned within the job.
“The Ministry of Petroleum Sources introduced a memo on the rehabilitation of Port Harcourt refinery for the sum of 1.5 billion, and that memo was $1.5 billion and it was permitted by council in the present day.
“So we’re pleased to announce that the rehabilitation of productiveness refinery will begin in three phases. The primary part is to be accomplished in 18 months, which is able to take the refinery to a manufacturing of 90 p.c of its nameplate capability.
“The second part is to be accomplished in 24 months and all the ultimate levels will probably be accomplished in 44 months and consultations are permitted and I consider that that is excellent news for Nigeria,” he stated.
Addressing the issue of refineries upkeep, which has dogged the nation’s 4 refineries through the years, Sylva stated the refineries could be handed over to operations and upkeep corporations to handle for the nation.
He added that the administration facet for the refurbished refineries was a part of the situations given by lenders of the funds for the upkeep venture, including that the situation had been embedded within the settlement.
“On the opposite very germane query about operations and upkeep. That has been an enormous downside for our refineries, as everyone knows, that was additionally exhaustively mentioned in Council and the settlement is that we’re going to place knowledgeable Operations and Upkeep firm to handle the refinery when it has been rehabilitated.
“In any case, it’s really one of many situations introduced by the lenders, as a result of the lenders say they’ll solely give us the cash if we have now knowledgeable operations and upkeep firm, and that already is embedded in our discussions with the lenders and we can not return on that.
He stated the difficulty of funding for the venture had been sorted out, explaining that “I wish to reply that the funds are all in place and work will begin forthwith.
“There are elements numerous elements to the funding: there may be funding from NNPC internally generated income, there may be funding from the funds and there may be additionally debt funding. For the lenders, we’re coping with AFREXIM and they’re very dedicated to us, we have now really concluded discussions with AFREXIM,” he stated.
On how the nation settled for an Italian firm, as a substitute of the unique builders, he stated “we discovered from the unique refinery builders that they don’t seem to be within the enterprise of rehabilitating refineries, they’re within the enterprise of constructing refineries. So they really pointed us to a rehabilitation firm that we’re coping with now.”
He additionally stated the curiosity of native contractors has been lined within the upkeep venture, saying “NCDMB is totally a part of the contracting course of and has safeguarded the curiosity, adequately, of our native contractors, so our native folks will probably be totally concerned with the Tecnimont S.p.A.”
He assured that the opposite refineries in Kaduna and Warri would even be rehabilitated, explaining that their works would begin earlier than the top of the present administration.
“On the final query, which is when the opposite refineries may also be rehabilitated? Discussions are ongoing. We wish to take separately and I wish to guarantee you that earlier than the lifetime of this administration expires, work on all of the refineries would have at the very least commenced,” he stated.
Port Harcourt refinery advanced
The Port Harcourt refinery, which started operation in 1989, is the biggest refining firm in Nigeria, pending when the Dangote refinery in Lagos will probably be activated.
At inception, the Port Harcourt refinery had a capability to course of 150,000 barrels of crude a day and was later upgraded to 210,000 barrels per day.
The refinery has been repaired innumerable instances, beneath numerous Flip Round Upkeep (TAM) contracts that had gulped enormous quantities.
Rehabilitation will get nods
The Petroleum and Pure Gasoline Staff Senior Workers Affiliation of Nigeria (PENGASSAN) and key gamers within the oil sector backed the Federal Authorities’s rehabilitation plan.
PENGASSAN President Festus Usifo stated: “I’m one of many two Labour representatives on the steering committee of refinery rehabilitation. PENGASSAN welcomes the award of contract for Port Harcourt refinery rehabilitation.
“We are going to press all stakeholders to make sure that this time round, all our 4 refineries will probably be functioning in full capacities.
Unbiased Petroleum Entrepreneurs Affiliation of Nigeria (IPMAN) Nationwide Vice President, Alhaji Abubakar Maigandi, additionally described the approval as a welcome improvement, saying it can convey provide of petroleum merchandise from the refinery.
He stated the quantity earmarked for the rehabilitation is so as since it’s a skilled firm that’s endeavor it.
“It’s a superb and welcome improvement. It should convey again the provision of petroleum merchandise. The Italian firm that’s given the job is knowledgeable organisation,” Maigandi added.
However the Chairman, Main Entrepreneurs Affiliation of Nigeria (MOMAN), Tunji Oyebanji, stated the federal government should have explored different choices to revamp the ailing refineries.
In line with him, the privatisation choice would have been higher due to the previous experiences with the refineries.
He stated: “If the brand new administration of the NNPC revamps the refineries, it will likely be superb as a result of it can enhance home refining capability, including that the refinery together with the Dangote Refinery, would care for home gasoline consumption and free others for the export market.”