The Nigerian National Petroleum Corporation (NNPC) is seeking to raise $1 billion oil prepay for revamping Port Harcourt refinery.
The oil firm intends to raise the fund in prepayment with trading firms to refurbish its largest refining complex at Port Harcourt. Seven sources familiar with the discussions confirmed this.
The sources said discussions were taking place with a range of foreign and Nigerian trading houses, including some that have previously worked with Nigeria, and asked not to be named.
Should the revamping happen, it would reduce Nigeria’s hefty fuel import bill. It would also result in Nigeria’s second oil-backed financing since the COVID-19 pandemic.
According to the sources, the fund is expected to be repaid over seven years through deliveries of Nigerian crude and products from the refinery once the revamping is complete. Cairo-based Afreximbank is leading the financing.
A spokesman for the Afreximbank said, “Afreximbank is looking into a facility for the refurbishment of the Port Harcourt Refinery. However, the borrower is yet to be determined.”
A source at one foreign bank, asking not to be named, said:
“It was unlikely to participate in Nigeria’s latest effort because of lower credit availability and increased reluctance to take out exposure in a high-risk country.”
Nigeria has four refineries with a combined capacity of 445,000 barrels per day (bpd) – one in the north at Kaduna and three in the oil-rich Niger delta region at Warri and Port Harcourt. The Port Harcourt complex consists of two plants with a combined capacity of 210,000 bpd.
In 2019, the refineries lost about 167 billion naira ($439.47 million) and only Warri processed any oil. In April 2020, they were all shut pending rehabilitation.
The NNPC is the state oil corporation, established on the 1st of April 1977. In addition to its exploration activities, the Corporation was given powers and operational interests in refining petrochemicals and products transportation, as well as marketing.
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These two Nigerian refineries recorded zero percent utilisation in March.