Minister of State for Petroleum Resources, Timipre Sylva, announced at the Federal Executive Council, (FEC), that the Federal Government of Nigeria has approved $1.5 billion for the rehabilitation of Port Harcourt Refinery.
According to industry experts, allocating such a huge sum for the refinery rehabilitation when the country is going through a severe resource crunch, may be a further drain on the economy
Minister of State for Petroleum Resources, Timipre Sylva, announced at the Federal Executive Council, (FEC), that the Federal Government of Nigeria has approved $1.5 billion for the rehabilitation of Port Harcourt Refinery. He added that the contract has been granted to an Italian firm Tecnimont spa, a leader in refinery maintenance. According to industry experts, allocating such a huge sum for refinery rehabilitation when the country is going through a severe resource crunch, maybe a further drain on the economy. The rehabilitation is planned to be completed in three phases of 18, 24 and 44 months. The funding would come from Nigerian National Petroleum Corporation (NNPC) Internally Generated Revenue (IGR), budgetary allocations and facility from Afreximbank.
.The failure of Nigeria’s refineries to function for years has left the country at the mercy of prices in the international oil market. The country has already spent about $25 billion in turnaround maintenance of its refineries in the past 25 years without much gain to boast of. According to an NNPC report last year, three of Nigeria’s four refineries recorded N1.64 trillion in cumulative losses recorded in their operations since 2014.
Last year the senate had decided to probe the (NNPC), over alleged $396 million spent on Turn-Around Maintenance (TAM) of the refineries between 2013 and 2015. Many Nigerians view TAM as an avenue for corruption. Also, the announcement has come at a time when the government is supposed to withdraw from the downstream oil business. Last year, the federal government announced total deregulation of the downstream sector and the removal of subsidies.Oil industry experts had advocated the PPP business model to turn around the industry. For example, the Dangote oil refinery, a 650,000 barrels per day (bpd) integrated refinery and petrochemical project, is expected to be Africa’s biggest oil refinery.
