The 38th virtual meeting of the Federal Executive Council (FEC) went on another wild goose chase as it approved the $1.5 billion for the rehabilitation of the nation’s non-functioning largest refining company, the Port Harcourt Refinery.
Minister of State for Petroleum, Timipre Sylva, said the rehabilitation will be done in three phases of 18, 24 and 44 months.
The Port Harcourt Refining Co. Ltd.’s (PHRC) Port Harcourt refining complex, includes a 60,000-b/sd hydroskimming refinery.
Sylva said the contract was awarded to an Italian company, Technimount SPA, who are experts in refinery maintenance, saying the funding has three components from Nigerian National Petroleum Corporation (NNPC) Internally Generated Revenue (IGR), budgetary allocations and Afreximbank loan.
The Minister of State told journalists alongside Ministers of Information and Culture (Lai Mohammed), Works and Housing (Babatunde Fashola), Health (Dr Osagie Ehanire) and Budget and National Planning (Clement Agba), that local content is fully involved in the job.
According to him, “the Ministry of Petroleum Resources presented a memo on the rehabilitation of Port Harcourt refinery for the sum of 1.5 billion, and that memo was $1.5 billion and it was approved by Council today. So we are happy to announce that the rehabilitation of productivity refinery will commence in three phases. The first phase is to be completed in 18 months, which will take the refinery to a production of 90 percent of its nameplate capacity.
“The second phase is to be completed in 24 months and all the final stage will be completed in 44 months and consultations are approved. And I believe that this is good news for Nigeria.”
Then Managing Director of NNPC announced in September 2019 that Nigeria is moving forward with the long-planned modernization of the refineries, including the that of Port Harcourt, in a programme that will optimize processing capacities at the sites by 2022.
Early in 2019, PHRC let a $50-million contract to Tecnimont SPA and Tecnimont Nigeria Ltd. (TNL) to carry out a complete integrity check and equipment inspections of the Port Harcourt complex, with oil major Eni appointed as technical adviser.
Subject to successful completion of the integrity check, Tecnimont and TNL, in collaboration with an unidentified partner, also was to execute EPC for the project’s second phase.
Located in Alesa Eleme, Port Harcourt, the PHRC operated two oil refineries, including an old plant commissioned in 1965 that can process 60,000 barrels (9,500 m3) per stream day, as well as the new one commissioned in 1989, which has a capacity of 150,000 barrels (24,000 m3) per stream day. The two refineries possess a combined capacity of 210,000 barrels (33,000 m3) per stream day, hence the tag of “biggest oil refining company in Nigeria.”
Last month, the NNPC concluded talks with lenders to raise $1 billion for the rehabilitation of the refinery, putting it on track to undertake its complete overhaul in Q1 2021.
The successful negotiations of the funding arrangement, led by African Export-Import Bank (AfriEximbank), paved way for the award of the contract by FEC.
When initial talks commenced in January, the terms of the loan by the lenders showed that it would be repaid with NNPC’s share of crude produced jointly with foreign partners over a seven-year period. It is not yet clear if the terms were adjusted following misgivings by Nigeria.
On Dec. 1, 2020, NNPC announced that it received seven bids from submitted by local and international companies for EPC contract award for the repairs.
Nigeria has four largely non-functional refineries with total installed capacity of 445,000 bpsd. . It is hoped that with their rehabilitation, coupled with the privately-owned Dangote refinery, the nation would end its reliance on fuel imports.
No major turnaround maintenance has been carried out in any of the refineries since 2008. The last TAM in PHRC was carried out in 2000. Meanwhile, the established best practice worldwide is that TAM should be conducted by refineries every two or maximum three years.
In the last 15–20 years, the refineries had a poor operating record with average capacity utilization hovering between 15 and 25 per cent per annum. Because of this, 70–80 per ent of the national petroleum products demand is met through import.
Currently, Nigeria imports about 1 million-1.25 million mt/month of gasoline to meet national demand estimated at about 50 million-60 million liters/day.