By Adewale Sanyaolu
Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has said that Nigeria lacks the resources to build a greenfield refinery currently at a estimated cost of $12billion.
He made the clarification while reacting to insinuations by critics that the $1.5 billion approved for the rehabilitation of the Port Harcourt Refinery would be enough to build a brand new refinery, noting that a new refinery would cost Nigeriabetween $7 billion and $12 billion which be hard to find at the moment.
This was even as Kyari defended the $1.5 billion Port Harcourt refinery rehabilitation amid widespread condemnation, saying it was a worthy undertaking.
On the propriety of spending so much to repair an old and disfunctional refinery that could easily have been sold off, the GMD explained that the refinery is a strategic national asset which should not be sold off just like that.
He noted that having learnt from the failure of previous models, NNPC would adopt the Operate & Maintain (O&M) model as a strategy in the execution of the rehabilitation project, which is also a key requirements by lenders.
Explaining the rehabilitation project to reporters in Abuja, Kyari said the approval for the project was taken after diligent consideration and in strict adherence to industry best standards.
He said that in arriving at the decision to award the Engineering, Procurement, and Construction (EPC) contract to TecnimontspA of Milan, Italy, after a competitive bidding process, the Corporation observed an unprecedented level of transparency and due diligence consisting of a governance structure and tender process that included key independent external stakeholders: Ministry of Finance, Nigeria Extractive Industry Transparency Initiative (NEITI), Infrastructure Concession Regulatory Commission (ICRC), Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and Nigeria Union of Petroleum and Natural Gas Workers (NUPENG).
He explained that in terms of outlook and job scoping, the rehabilitation project is different from the routine Turn-Around Maintenance which was last carried out on the Port Harcourt Refinery 21 years ago. Kyari explained that unlike TAM which should normally be executed every two years but was neglected for many years, the rehabilitation project would involve comprehensive repairs of the plant with significant replacement of critical equipment and long lead items to ensure the integrity of the plant on the long term.
On the financing for the project, the NNPC helmsman said that African Export-Import Bank (Afreximbank), as a reliable lender, has agreed to raise $1billion towards the rehabilitation project.