In Historic Move, Nnpc, Technimont Seal Pact As Ph Refinery Rehabilitation Begins This Month
The long-awaited rehabilitation of Port Harcourt Refining Company Limited is set to commence in April, following the sign-off of contract agreement between the Nigerian National Petroleum Corporation and Tecnimont SpA of Italy, a globally reputable Engineering, Procurement & Construction Company, at the refinery in Port Harcourt, today.
This is coming 21 years after the last Turn Around Maintenance was conducted on the refinery.
THE WHISTLER can authoritatively report that the agreement would be signed by 11am today.
The Federal Government had on March 17 commenced a fresh drive to rehabilitate Nigeria’s ailing and under-performing refineries by approving the sum of $1.5bn for the rehabilitation of the Port Harcourt Refinery.
The contract was approved at the 38th virtual FEC meeting presided over by President Muhammadu Buhari in Abuja.
The Minister of State for Petroluem Resources, Timipre Sylva, had said that the project would be delivered in phases with the last phase due in 44 months.
The project would be jointly funded by the Nigerian National Petroleum Corporation Internally Generated Revenue, budgetary allocations provisions and Afreximbank, respectively.
The rehabilitation of the refineries were critical to ensuring that they can deliver beyond the 90 percent installed capacity.
By every standard, a refinery is expected to operate at least 90 per cent of installed capacity but it was impossible to run any of these refineries before the shut down at that level.
Over the years, the Federal Government had made efforts to run the refineries at 60 per cent of the installed capacity but this had led to value destruction, where oil companies take $100 crude to the refinery and bring out only $70.
In particular, the Port-Harcourt Refining Company had experienced decline in performance over the past two decades due to delays in conducting mandatory Turn Around Maintenance.
The non-performance of the nation’s refineries is one of the major reasons for the importation of petroleum products. Since Nigeria does not have control of the international price of crude oil, the government had been forced to pay huge amount to subsidize petrol.
Within a period of 13 years covering January 2006 and December 2019, the Federal Government spent a whopping sum of N10.413trn to subsidize the price of Premium Motor Spirit for Nigerians according to government records.
Within the 13 year period, the N10.413trn burden of subsidy payment for PMS translates into a yearly average payment of about N743.8bn.
Nigeria’s spending on oil subsidy is more than four times what the country spends on building schools and health centres in a country of over 200 million people.
The country has the world’s 10th largest crude reserves, yet spends at least N743.8bn on fuel subsidy annually.
By the Federal Government’s schedule, the Port Harcourt Refinery will refine crude oil at optimum capacity by 2024 and could save the nation billions of dollars, which could then be allocated to other sectors, such as health and education.
The Group Managing Director of the NNPC, Mallam Mele Kyari described the signing of the contract as a significant milestone in Federal Government’s efforts to restore the nation’s refineries to their optimum capacities.
“This is a significant moment in our economic development as a country. We are going to witness a major reduction in the importation of petroleum products and a reduction in constraint on our foreign exchange,” Kyari noted.
The NNPC Boss added that the development will also lead to increase in revenues for the country, employment generation to thousands of Nigerians as well as a significant growth of the nation’s manufacturing sector.
The sign-off ceremony was a culmination of a pain-staking EPC contractor selection process conducted by the NNPC which saw Tecnimont SpA emerging as the contract winner for the Engineering, Procurement, Construction, Installation & Commissioning Services in PHRC at the sum of $1.5bn.
Tecnimont SpA is a representative of the Original Refinery Builder which is one of the top ten global EPCIC Contractor in refineries.
It is globally reputable and capable, with requisite experience of similar jobs across the globe.
Report Credit: The Whistler