FEC Approves New $1.5b For Rehabilitation Of Moribund PH Refinery

18/03/2021 16 Views

The Federal Executive Council (FEC), presided over by President Muhammadu Buhari Wednesday, approved the sum of $1.5 billion, about N575 billion, for immediate commencement of rehabilitation work on the largest refining company in the country, the 32-year-old Port Harcourt Refinery.

The Minister of State for Petroleum Resources, Timipre Sylva, disclosed this to newsmen after the council meeting at the Presidential Villa, Abuja. Sylva said the contract for the rehabilitation was awarded to an Italian firm, Tecnimont SPA, to maintain and is expected to be executed in three phases.

While the first phase is expected to be completed within a period of 28 months, the Minister said the second and third phases will be completed in 24 and 44 months respectively.

He added that the funding has three components from Nigerian National Petroleum Corporation (NNPC), Internally Generated Revenue (IGR), budgetary allocations provisions, and Afreximbank.

Sylva gave the assurance that the government would also facilitate the complete rehabilitation of the Warri and Kaduna refineries before the end of the lifespan of the current administration.

This is coming on the heels of the Federal Government’s proposal to sell or concession no fewer than 36 of its properties in the bid to raise funds to finance the 2021 budget. Top among these properties are the three refineries in Kaduna, Warri, and Port Harcourt, among others.

The Port Harcourt refinery, which began operation in 1989, remains the largest refining company in Nigeria, until the time the Dangote refinery in Lagos will be activated. At inception, it had a capacity to process 150,000 barrels of crude a day and was later upgraded to 210,000 barrels per day. The refinery has been repaired innumerable times, under various Turn Around Maintenance (TAM) contracts that had gulped huge amounts.

It would be recalled that Nigeria has spent about $25 billion in turnaround maintenance of refineries in the past 25 years, the prevailing development is coming after promises by the administration that the government would no longer spend on the facility. Previous rehabilitations notwithstanding, the Nigerian National Petroleum Corporation (NNPC) audit report had last year revealed that three of the nation’s four refineries recorded N1.64 trillion cumulative losses in their 2014 to 2018 details.

Despite processing no crude oil in June last year, the three refineries still cost the country N10.23 billion in expenses according to the report. The NNPC had said the three refineries processed no crude because of the rehabilitation works being carried out on them.

“There was no associated crude plus freight cost for the three refineries since there was no production but operational expenses amounted to ₦10.27 billion. This resulted in an operating deficit of ₦10.23 billion by the refineries.”

The report stated that the combined losses from the Port Harcourt Refinery and Kaduna Refinery were N208.6 billion in 2014; N252.8 billion in 2015; N290.6 billion in 2016; N412 billion in 2017 and N475 billion in 2018.

Currently operating at zero capacity, NNPC had shut down the facilities stating that it would adopt the Build, Operate and Transfer (BOT) model to run the refineries.

Reacting, Rivers State Governor, Nyesom Wike, has said the move by the Federal Government to rehabilitate the Port Harcourt Refinery is one of the empty promises of the All Progressives Congress (APC) government. He stated this yesterday while featuring on Channels Television’s ‘Politics Today’ programme.

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