The Nigerian National Petroleum Corporation (NNPC) has signed a contract with Italy’s Maire Tecnimont for the rehabilitation of the Port Harcourt Refinery.
The $1.5 billion contract was signed Tuesday by the managing director of the Port Harcourt Refinery, Ahmed Dikko, and the vice president of Tecnimont, Sub-Saharan Africa, Davide Pellizola, respectively for NNPC and Tecnimont.
The signing is the latest indication the contract for the repairs of the 210,000 barrels per-day-refinery has taken off. The Federal Executive Council approved the contract last month, a decision many analysts criticised.
Nigeria has four refineries, owned by the government, but imports basically its refined petroleum products. The approval for the Port Harcourt Refinery was welcomed with mixed reactions as the country in the past spent billions of dollars on refinery maintenance with no success.
Atedo Peterside, who was on the National Council on Privatisation (NCP) between 2010 and 2015, advised the federal government to halt the “brazen & expensive adventure.”
Former vice president, Atiku Abubakar, also kicked against the project. Analysts advise the government to instead privatise the refineries and allow private investors manage them.
In March, 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 funding will be from many components including the NNPC, Internally Generated Revenue (IGR), budgetary provisions, and Afreximbank.
The minister also said a maintenance company would also be put in place to ensure an effective maintenance culture.
“Talking about operations and maintenance, that has been a big problem for our refineries and that was also exhaustively discussed in council and the agreement is that we are going to appoint a professional operations and maintenance and operations company to manage the refinery when it is finally rehabilitated,” he said.
“It is actually one of the conditions presented by the lenders because the lenders said they can give us the money if we have a professional operations and maintenance company and that already is embedded in our discussions with the lenders. We’re not going back on that,” he said.
Pierroberto Folgiero, Maire Tecnimont Group Chief Executive Officer, said “With this great result we confirm the soundness of our business strategy on geography diversification, as one of its key elements is to grow and assist our clients in their revamping initiatives, leveraging on our technological know-how to ensure more efficient and environmentally better performing processes and products.”
“It represents a testament of our technological DNA, as we are strongly increasing our focus on initiatives for the modernization of the refining sector, such as these strategic rehabilitation works. Moreover, we enhance our footprint in Nigeria and in Sub-Saharan Africa, a market with excellent downstream prospects given its demographics and the necessity to unlock greater added value from the transformation of natural resources. We are eager to keep on supporting a leading player in the area such as NNPC to develop Africa’s downstream sector,” he added.
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