Abuja, Nigeria. Sept 13th: Nigerian National Petroleum Corporation (NNPC) Group Managing Director, Dr. Maikanti Baru, told reporters on Wednesday in Abuja that it will shortly close down three of its refineries in Kaduna, Warri and Port Harcourt for a comprehensive rehabilitation aimed at bringing them back to their nameplate production capacities.
Dr. Maikanti Baru said the shutdown of the refineries would allow the corporation to undertake their rehabilitation in ways that are different from what had been done in the past. He noted that the refineries would come back on stream as new facilities when it concludes the rehabilitation project ahead of the country’s plan to exit petroleum products importation in 2019.
Speaking on the sidelines of the inaugural Nigerian Pipeline Security Conference and Exhibition organised by the Pipeline Association of Nigeria (PLAN), Baru said:
“As you know, it is being the perception of the public that the repairs of the refineries are never done thoroughly. So this time, our intention is to shut down the refineries when we are ready, and then fully bring them back to what they should be as new refineries.”
Photo: Oil refinery
He further explained:
“Obviously, it is going to be a complex procedure and as such, we have to break down the various work packages to ensure that all the various workforces have sufficient focus, and if you notice the time that we inaugurated (eight committees on the refineries rehabilitation), the work streams are composed of the general managers and executive directors level, and they will be having a day-to-day look at it, while the steering committee is at my level and that of the chief operating officers all looking at the problems the workstations have and they will proffer solutions immediately.”
Eyebrows Raised As Kachikwu Says Nigeria Will Spend $1.2B To REPAIR 3 Refineries
The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, at a news briefing in Abuja explained that Nigeria will spend 1.2 billion dollars on REPAIR of three refineries. He also said reports of concession of Port Harcourt to Oando and Agip companies were untrue .
Kachikwu said at a news briefing that ”a technical committee set up by the government to undertake the review and selection process is yet to submit its report”.
There had been reports that government had reached agreement with the firms following which the Senate asked that the contract be stopped.
According to the minister, what has been accomplished by the committee is coming up with a holistic investment figure enough to fix the nation’s three refineries.
”We have not selected any firm yet even though some firms have shown interests.
”We need about 1.2 billion dollars to repair and bring the three refineries of the Nigerian National Petroleum Corporation (NNPC) in Port Harcourt, Warri, and Kaduna, up to 100 per cent production level,” he said.
Photo: Nigeria Minister of State for Petroleum Resources, Dr Ibe Kachikwu
The minister said the cost of the project had been determined in terms of the extent of work required.
”The total cumulative amount is in the 1.1 billion dollars and 1.2 billion dollars category between all the refineries. And that of course does not include the pipelines.
”You have got to address the pipelines and that is something else that is being done,” he said.
He further explained that Nigeria spent about N4.74 trillion on importation of petrol in the past year which was 30 per cent of the total foreign exchange outlay of the Central Bank of Nigeria (CBN).
”The importation of petroleum products between January and December of last year amounted to about 20 million metric tonnes.
”A total amount of N3.4 trillion was spent, the consumption of FX from CBN was approximately 30 per cent of CBN total FX outlay, and the logistic costs of that importation was about N1.34 trillion within the same one year period.’ ‘
On domestic refining capacity, the minister said the nation produced six million litres out of a total consumption of about 35 million litres per day.
”In the midst of this sort of statistics, it was absolutely critical that we move in to try to end importation of products, improve our refineries and get them up to 100 per cent.
”We are looking for financing of the repair and upgrade of the refineries. We are not concessioning refineries, it is simply a financing package,” he said.
Kachikwu said the government would invite the original refineries builders for the three refineries to undertake the repairs but stressed that it had not selected any financier for the repairs.
”Once we identify those individuals and see how we can make contacts with those who built the refineries – Saipem in Warri; JGC in Port Harcourt; and Chiyoda in Kaduna, to ensure that we go back to them.’
He said such step was necessary ‘’because they (builders) have the designs, engineering outlay and upgrade capabilities, and in some cases, they have the access to spare part.
”If we are going to achieve this within the time frame we gave, we are going to meet them and I think we have largely decided that those are the people we should use,” he stated.
The minister said the government would have to consider the overall capabilities of those interested in the process.
He also added that their business model would have to be tied into the current Direct Sales Direct Purchase (DSDP) of NNPC to be able to make profit, especially with consideration to the country’s downstream sector, which had not been deregulated.
”We haven’t reached there, and so anybody indicating that contracts have been given is wrong.
”In terms of who wins the financing awards, that is still work in progress. We have not received from the technical committee their final report on this.
”We need to review and accept and go to FEC for approval and the National Assembly before we proceed.
“There is an urgency in this sector that we need to address. We have begun engagements with the National Assembly and the process continues, but we need speed in all these,” he added.