$1.5bn refinery contract: We are doing rehabilitation, not turnaround maintenance – NNPC
The Nigerian National Petroleum Corporation (NNPC) said on Monday that the $1.5 billion approved for the Port Harcourt refinery was for complete rehabilitation and not turnaround maintenance.
The Group Managing Director (GMD), NNPC, Mele Kyari, said this in Abuja on Monday, while reacting to controversies and unverified claims by some Nigerians on the funds meant for the project.
Kyari said that the refinery would work in optimal capacity at the completion of rehabilitation programme.
“We are not doing turnaround maintenance, we are doing rehabilitation of the refinery, and it is very different; it means that we are replacing certain major components.
“We are introducing some items that ordinarily we won’t need to do in turnaround maintenance and there are major shift in the status of the plant that we have to do and it is not done during turnaround maintenance.
“During rehabilitation, by the 18th month, part of this plant will begin to produce particularly the gasoline plants.
“In rehabilitation, we normally don’t shut down the plant completely, we repair a segment of it, and then it starts working, and then, you move to the next segment.
“You continue to scale up and that is why, within the four-year period, the contractor would have completely left your premises.
“What it means in a technical sense is that in 18 months, we will see production coming from that plant; we will follow it plant by plant until we are completely done,” Kyari said.
The NNPC GMD also said that the process of rehabilitation started about 10 years ago but was slowed down due to a number of mistakes that occurred along the line.
He, however, noted that an Italian company had been contracted for the job with one billion dollars financing arrangement from the Afreximbank.
“This process started 10 years ago and a number of mistakes happened leading to the enormous delay we have seen in this process because there were a lot of interferences in the past but these are gone.
“Initially, we thought that the best way to go was to go to the original builder but it wasn’t the right strategy.
“Another way of making this project work was the introduction of borrowing for the repair work because when you borrow, the lenders will put conditions and one of the conditions is that it should be maintained under ‘own and earn’.
“This means that the NNPC will not operate this plant as a basic requirement of the financing institution. The financing partner will ensure that the contractor will work efficiently.
“Importantly is that the contractor O&M gave a guarantee that the facility will operate for the duration of the loan and the fact the project will be done under a financing structure supported by Afreximbank.
“The bank has promised a 500 million dollars loan in the first instance and additional 500 million dollars making it one billion dollars and the condition is for the loans to be repaid from the operations and proceeds of this plant,” Kyari added.
He expressed optimism that the refinery would work optimally for the next 15 years after the rehabilitation.
