Why FG approved $1.5bn for Port Harcourt Refinery rehabilitation
Facts have emerged why the Federal Government approved $1.5 Billion for the rehabilitation of the Port Harcourt Refinery in Rivers State.
The 38th virtual meeting of the Federal Executive Council (FEC), presided over by President Muhammadu Buhari had approved the sum for the rehabilitation of the Refinery said to be the largest refining company in the country.
According to the SUN, the Minister of State for Petroleum, Timipre Sylva, said the rehabilitation will be done in three phases of 18, 24 and 44 months.
He said the contract was awarded to an Italian company, Tecnimont spa, who are experts in refinery maintenance.
He said the funding has three components from Nigerian National Petroleum Corporation (NNPC) Internally Generated Revenue (IGR), budgetary allocations provisions and Afreximbank.
Sylva who addressed State House Correspondents alongside his colleagues, Information and Culture, Lai Mohammed, Works and Housing, Babatunde Fashola, Health, Dr Osagie Ehanire and Budget and National Planning, Clement Agba, assured that local content is fully involved in the job.
He said: “The Ministry of Petroleum Resources presented a memo on the rehabilitation of Port Harcourt refinery for the sum of 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 the final stage will be completed in 44 months and contract was approved. And I believe that this is good news for Nigeria.”
Speaking more on the contractor, the minister said: “The contractor that was approved by Council today is Messrs. Tecnimont spa, of Italy, it’s an Italian EPC company that won the bid and that was approved by Council.”
On the question about operations and maintenance, Sylva said: “That has been a big problem for our refineries, as we all know, that was also exhaustively discussed in Council and the agreement is that we are going to put a professional Operations and Maintenance company to manage the refinery when it has been rehabilitated.
“In any case, it is actually one of the conditions presented by the lenders, because the lenders say they can only give us the money if we have a professional operations and maintenance company, and that already is embedded in our discussions with the lenders and we cannot go back on that.”
On whether the funds for the rehabilitation of the refinery was available, the minister said: “I want to answer that the funds are all in place and work will commence forthwith.”
On when the other refineries in the country will be rehabilitated, he said: “Discussions are ongoing. We want to take one at a time and I want to assure you that before the lifetime of this administration expires, work on all the refineries would have at least commenced.”
On why the government did not go back to the original builders of the refinery, Sylva said: “The first action was to go to the original refinery builders, but you all know, like I do, that if you have a Toyota car, and your Toyota car develops problem, you don’t have to go to the builders of the Toyota to fix it. Usually there are people in the business of building Toyota cars, there are also people in the business of maintaining Toyota cars.
“So, we found out from the original refinery builders that they are not in the business of rehabilitating refineries, they are in the business of building refineries. So they actually pointed us to a rehabilitation company that we’re dealing with now.”
Asked who the lenders of the funds were, the minister said: “There are various components to the funding: there is funding from NNPC internally generated revenue, there is funding from the budget and there is also a debt funding. For the lenders, we are dealing with AFREXIM bank and they are very committed to us, we have actually concluded discussions with AFREXIM.”
On the issue of local participation in the rehabilitation of the refinery, Sylva said: “As you know, there is a local content law. The Nigerian Content Development and Monitoring Board (NCDMB) is fully part of the contracting process and has safeguarded the interest, adequately of our local contractors, so our local people will be fully involved with the Tecnimont spa.”
On if the rehabilitation of the refinery was as a result of Labour unions demand that deregulation of petroleum price should come after refineries rehabilitation, he said: “First, I am not aware of any such agreement that deregulation should only take place after the refineries have been fixed, that was at no time part of our agreement. But of course, this government, from the very beginning, has been in the process of fixing and rehabilitating this refinery, so, it is not because of our discussion with Labour, but it is actually the desire of the administration to ensure that our refineries work and that is the process that has bore fruit today.”