NNPC Replies Critics Of PH Refinery Rehabilitation, Justifies $1.5bn Spending

The Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari has dismissed arguments by critics that the $1.5bn approved for the rehabilitation of the Port Harcourt Refinery was a waste of resources which would have been used to build a brand new refinery.

The Federal Government had announced the approval of the sum of N569 bn ($1.5 bn) for project which had been awarded to an Italian company, Technimount SPA.

The refineries according to the Corporation had only worked sporadically, not reaching an optimal expected performance for years due to activities of vandals.

The GMD, in a statement on Tuesday noted that a new refinery would cost the nation between $7bn and $12bn and that such funds were not available now.

He noted that having learnt from the failure of previous models, NNPC would adopt the Operate & Maintain Model as a strategy in the execution of the rehabilitation project.

This, according to him, is also one of the key requirements by the lender.

He said, “The recently approved rehabilitation exercise of the 210,000 barrels per day capacity Port Harcourt Refinery is a worthy undertaking embarked upon after diligent consideration and in strict adherence to industry best standards.

“Arriving at the decision to award the Engineering, Procurement, and Construction contract to Tecnimont SPA of Milan, Italy, after a competitive bidding process, the Corporation observed an unprecedented level of transparency and due diligence which consists of a governance structure and tender process that included key independent external stakeholders.

On the choice of Tecnimont SpA as the contractor to handle the project, he said that the company is a representative of the Original Refinery Builder and is one of the top 10 global Engineering, Procurement, Construction, Installation and Commissioning Contractor in refineries, adding that it has requisite experience in similar jobs across the globe.

He said the National Engineering and Technical Company and Kellogg, Brown & Root and are acting as NNPC Engineering Consultants to the project with support from Wood Mackenzie to ensure that the project is delivered on schedule, within budget and at the right quality.

He explained that in terms of outlook and job scoping, the rehabilitation project is different from the routine Turn-Around Maintenance which was last carried out on the Port Harcourt Refinery 21 years ago.

According to Kyari, unlike TAM which should normally be executed every two years but was neglected for many years, the rehabilitation project would involve comprehensive repairs of the plant with significant replacement of critical equipment and long lead items to ensure the integrity of the plant on the long term.

On the financing for the project, the NNPC Helmsman said that African Export-Import Bank, as a reliable lender, has agreed to raise $1bn towards the rehabilitation project.

He argued that a credible and capable lender like Afreximbank would never agree to put such huge amount of money where there would be no value.

Commenting on the propriety of spending so much to repair an old refinery when it could easily be sold off, the GMD explained that the refinery is a strategic national asset which should not be sold off just like that.