The Nigerian National Petroleum Corporation, NNPC recently disclosed its openness to external financing for the rehabilitation of the nation’s ailing refineries.
This is coming after over a year of seeking offshore funding for the revamp of the refineries which was met with burdensome conditions demanded by the proposed financiers. The corporation 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.
According to a report by Punch last month, 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.
According to Group General Manager, Group Public Affairs Division, NNPC, Mr Ndu Ughamadu, “The earlier arrangement made to source the funding offshore didn’t work out as expected, so the rehabilitation effort is being funded locally”.
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.”
Recall that 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.
Meanwhile, 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.