…Provides Justification for $1.5billion Refinery EPC Project
In less than a week after a former vice president and presidential candidate of the Peoples’ Democratic Party (PDP) in 2019, Alhaji Atiku Abubakar vehemently criticized the Federal Executive Council’s (FEC) approval of the sum of $1.5b for the turnaround maintenance (TAM) of the Port Harcourt Refinery, the Nigeria National Petroleum Corporation (NNPC) has risen in defense of the action of the President Muhammadu Buhari led administration.
While speaking to reporters at the NNPC Towers in Abuja on Monday, the Group Managing Director of the Corporation, Mallam Mele Kyari, explained that the recently approved rehabilitation exercise of the 210,000 barrels per day capacity Port Harcourt Refinery is a worthy undertaking embarked upon after diligent consideration and in strict adherence to industry best standards.
In what may be considered a counter argument to Atiku’s position that the planned rehabilitation is a suspicious gambit because “Nigeria’s economy is in dire straits…,’ Kyari stated that the decision to award the Engineering, Procurement, and Construction (EPC) contract to Tecnimont spA. of Milan, Italy, followed a competitive bidding process which strictly adhered to high levels of transparency and due diligence consisting of a governance structure and tender process midwifed by multi-sectoral and independent external stakeholders.
The GMD listed the stakeholders as the 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).
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.
He further clarified 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.
RovingNaija recalls that in his statement last Thursday, Atiku Abubakar had argued that, “we cannot as a nation expect to make economic progress if we continue to fund inefficiency…and we are going too deep into a debt trap for unnecessarily overpriced projects.’ However, the GMD explained that a reliable lender such as the African Export-Import Bank (Afreximbank) could not have agreed to raise $1billion for the rehabilitation exercise if it considered the project unviable.
“A credible and capable lender like Afreximbank would never agree to put such huge amount of money where there would be no value,” he said and dismissed the contention that the $1.5bn approved for the rehabilitation of the project was enough to build a brand new refinery, stressing that a new refinery would cost the nation between $7bn and $12bn and that such funds were not available now.
Kyari further 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 one of the key requirements by the lender.
On the choice of Tecnimont SpA as the contractor to handle the project, Mallam Kyari explained that the company is a representative of the Original Refinery Builder (ORB) and is one of the top 10 global Engineering, Procurement, Construction, Installation and Commissioning (EPCIC) Contractors in refineries, adding that it has requisite experience in similar jobs across the globe.
He said the National Engineering and Technical Company (NETCO) and Kellogg, Brown & Root (KBR) are acting as NNPC Engineering Consultants to the project with support from Wood Mackenzie to ensure that the project is delivered on schedule, within budget and at the right quality.
Commenting on the propriety of spending so much to repair an old refinery when it could easily be sold off, the opined that the refinery is a strategic national asset which should not be sold off just like that.