Refineries Revamp: We’re Open to External Financing, Says NNPC

• Refineries Revamp: We’re Open to External Financing, Says NNPC

The Nigerian National Petroleum Corporation has said it is still open to external financing for the rehabilitation of the nation’s ailing refineries.

After over a year of seeking offshore funding for the revamp of the refineries, the NNPC recently announced that it had abandoned the strategy due to “onerous conditions’ demanded by the proposed financiers.

It said it had to resort to immediate direct funding from internal cash flows and debt financing from the financial markets for the project.

The refineries, which are located in Port Harcourt, Kaduna and Warri, have a combined installed capacity of 445,000 barrels per day but have continued to operate far below the installed capacity for many years.

The PUNCH exclusively reported on March 20, 2019, that the operating deficit recorded by the refineries rose by 39 per cent to N132.5bn in 2018, as Kaduna, Port Harcourt and Warri refineries were idle for 11 months, seven months and three months respectively.

“The earlier arrangement made to source the funding offshore didn’t work out as expected, so the rehabilitation effort is being funded locally,” the Group General Manager, Group Public Affairs Division, NNPC, Mr Ndu Ughamadu, told our correspondent in a telephone interview on Monday.

He said, “By the time we conclude the rehabilitation of Port Harcourt refinery, we will proceed to the other ones. Rehabilitation goes beyond turnaround maintenance; it is as if you are just remodelling the refineries. Turnaround maintenance is just like you are servicing your car.”

According to him, this is the first time a rehabilitation exercise is being carried out on the refineries.

Asked if the NNPC had ruled out third-party financiers, Ughamadu said, “They are welcome but the important thing is that we are funding it ourselves. If there are external financiers that will come with favourable terms, why not? We will accept them. But if the terms are not favourable, we will not accept.”

On March 21, 2019, the corporation announced the commencement of the first phase of the rehabilitation of the 210,000 barrels per day capacity Port Harcourt Refinery complex, comprising the 60,000 bpd old refinery built in 1965 and the 150,000bpd new refinery inaugurated in 1989.

It said the project would be executed by Milan-based Maire Tecnimont S.p.A, in collaboration with its Nigerian affiliate, Tecnimont Nigeria.

The Group Managing Director, NNPC, Dr Maikanti Baru, was quoted as saying that at the end of phase 1, the refinery complex should be able to reach 60 per cent capacity utilisation.

The national oil firm said the first phase of the rehabilitation contract, which would run for six months, would involve detailed integrity check and equipment inspection of the Port Harcourt Refinery complex beginning from the end of March 2019.

According to it, the integrity test comes as a forerunner to the second phase of the rehabilitation project which entails a comprehensive revamp of the complex aimed at restoring the refinery to a minimum of 90 per cent capacity utilisation.

It said subject to the successful completion of the integrity checks, phase 2 of the project would be executed on an Engineering Procurement Construction basis by Tecnimont in collaboration with the original builders of the plant, JGC of Japan.