Why We Can’t Build New Refinery-NNPC Boss

The Nigerian National Petroleum Corporation (NNPC) ,Monday,said the idea behind the approval of yesterday $1.5 billion for the rehabilitation of the Port Harcourt refinery would benefit the country in the long run.

Group Managing Director of the corporation, Mallam Mele Kyari,disclosed this in Abuja where he said that building a new one,as being suggested,will cost the federal government between $7 billion and $12 billion.

According to him,resources are not available to build new one,while the banking sector is not ready to put in the money because they no longer fund oil projects of that magnitude.

He added that building  a new refinery will take a period of four years, during which Nigeria must continue to import products.

He explained that  for national strategic purposes, that would be a wrong decision, with the last turn-around-maintenance of the Port Harcourt having been done 21 years ago.

He added  that the current huge cost of rehabilitation was because the last turn-around-maintenance was not properly executed.

He  said all stakeholders and agencies of the government were involved in the process leading to the award, saying that it wasn’t a Turn Around Maintenance that was currently being carried out but total rehabilitation.

Kyari maintained  that the process went through the Bureau of Public Procurement and other such bodies, saying that he was confident that the best decision was taken after the tender process.

He stressed that the process was delayed for the past 10 years because of unwarranted interferences and strategy problems, including going to the original refinery builders, which he said was the wrong thing to do.

Kyari said that the borrowing angle was introduced because typically, lenders will give conditions, one of which is an Operations and Maintenance contract arrangement, meaning that NNPC will not operate the plant, as it will be done in consonance with what he described as the best global practice.

“More than that, the contractors will give a guarantee that it will work for such a period of time. That’s part of the requirements which was absent in previous ones under the TAM arrangements,” he said.

He promised  that the plant will work and the loans will be repaid, saying that he was confident that in the next 15 years, the plant will still be running.

The NNPC boss said in 18 months, gas will be obtained from the plant and will eventually, scale up until the contractors leave the site, unlike a new one that will require the whole plant to be completed before it starts functioning.

He expressed that the loan will be repaid from when the refinery becomes functional, adding that a refinery can produce a margin of $4-$7 per barrel which will be used to finance the loan.