We Are Doing Rehabilitation, Not Turnaround Maintenance — NNPC

The Nigerian Nation­al Petroleum Corpo­ration (NNPC) said on
Monday that the $1.5 billion approved for the Port Harcourt
Refinery was for complete rehabilitation and not turnaround
mainte­nance.

The Group Managing Di­rector (GMD), NNPC, Mele Kyari, said this
in Abuja on Monday, while reacting to controversies and unverified
claims by some Nigerians on the funds meant for the proj­ect.

Kyari said that the refin­ery would work in optimal capacity at
the completion of rehabilitation programme.

“We are not doing turn­around maintenance, we are doing
rehabilitation of the refinery, and it is very different; it means
that we are replacing certain major components.

“We are introducing some items that ordinarily we won’t need to
do in turn­around maintenance and there are major shift in the
status of the plant that we have to do and it is not done during
turnaround mainte­nance.

“During rehabilitation, by the 18th month, part of this plant
will begin to produce particularly the gasoline plants.

“In rehabilitation, we nor­mally don’t shut down the plant
completely, we repair a segment of it, and then it starts working,
and then, you move to the next segment.

“You continue to scale up and that is why, within the four-year
period, the contrac­tor would have completely left your
premises.

“What it means in a techni­cal sense is that in 18 months, we
will see production com­ing from that plant; we will follow it
plant by plant until we are completely done,” Kyari said.

The NNPC GMD also said that the process of rehabili­tation
started about 10 years ago but was slowed down due to a number of
mistakes that occurred along the line.

He, however, noted that an Italian company had been contracted
for the job with one billion dollars financing arrangement from the
Afrex­imbank.

“This process started 10 years ago and a number of mistakes
happened leading to the enormous delay we have seen in this process
because there were a lot of interfer­ences in the past but these
are gone.

“Initially, we thought that the best way to go was to go to the
original builder but it wasn’t the right strategy.

“Another way of making this project work was the introduction of
borrowing for the repair work because when you borrow, the lenders
will put conditions and one of the conditions is that it should be
maintained under ‘own and earn’.

“This means that the NNPC will not operate this plant as a basic
requirement of the financing institution. The financing partner
will ensure that the contractor will work efficiently.

“Importantly is that the contractor O&M gave a guar­antee
that the facility will op­erate for the duration of the loan and
the fact the project will be done under a financ­ing structure
supported by Afreximbank.

“The bank has promised a $500 million loan in the first instance
and addition­al $500 million making it one billion dollars and the
con­dition is for the loans to be repaid from the operations and
proceeds of this plant,” Kyari added.

He expressed optimism that the refinery would work optimally for
the next 15 years after the rehabilitation.

The Nigerian Nation­al Petroleum Corpo­ration (NNPC) said on
Monday that the $1.5 billion approved for the Port Harcourt
Refinery was for complete rehabilitation and not turnaround
mainte­nance.

The Group Managing Di­rector (GMD), NNPC, Mele Kyari, said this
in Abuja on Monday, while reacting to controversies and unverified
claims by some Nigerians on the funds meant for the proj­ect.

Kyari said that the refin­ery would work in optimal capacity at
the completion of rehabilitation programme.

“We are not doing turn­around maintenance, we are doing
rehabilitation of the refinery, and it is very different; it means
that we are replacing certain major components.

“We are introducing some items that ordinarily we won’t need to
do in turn­around maintenance and there are major shift in the
status of the plant that we have to do and it is not done during
turnaround mainte­nance.

“During rehabilitation, by the 18th month, part of this plant
will begin to produce particularly the gasoline plants.

“In rehabilitation, we nor­mally don’t shut down the plant
completely, we repair a segment of it, and then it starts working,
and then, you move to the next segment.

“You continue to scale up and that is why, within the four-year
period, the contrac­tor would have completely left your
premises.

“What it means in a techni­cal sense is that in 18 months, we
will see production com­ing from that plant; we will follow it
plant by plant until we are completely done,” Kyari said.

The NNPC GMD also said that the process of rehabili­tation
started about 10 years ago but was slowed down due to a number of
mistakes that occurred along the line.

He, however, noted that an Italian company had been contracted
for the job with one billion dollars financing arrangement from the
Afrex­imbank.

“This process started 10 years ago and a number of mistakes
happened leading to the enormous delay we have seen in this process
because there were a lot of interfer­ences in the past but these
are gone.

“Initially, we thought that the best way to go was to go to the
original builder but it wasn’t the right strategy.

“Another way of making this project work was the introduction of
borrowing for the repair work because when you borrow, the lenders
will put conditions and one of the conditions is that it should be
maintained under ‘own and earn’.

“This means that the NNPC will not operate this plant as a basic
requirement of the financing institution. The financing partner
will ensure that the contractor will work efficiently.

“Importantly is that the contractor O&M gave a guar­antee
that the facility will op­erate for the duration of the loan and
the fact the project will be done under a financ­ing structure
supported by Afreximbank.

“The bank has promised a $500 million loan in the first instance
and addition­al $500 million making it one billion dollars and the
con­dition is for the loans to be repaid from the operations and
proceeds of this plant,” Kyari added.

He expressed optimism that the refinery would work optimally for
the next 15 years after the rehabilitation.