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Nigerian engineers to repair refineries for N99bn – NNPC

By BusinessNews Staff on February 13, 2015

The Nigerian National Petroleum Corporation on Wednesday said it had engaged the services of in-house engineers to rehabilitate the country’s three ailing refineries at a cost of $550m (N99bn), down from the $1.6bn (N288bn) presented to it by foreign contractors.

The refineries are the Port Harcourt Refining Company, Kaduna Refining and Petrochemical Company Limited and the Warri Refining and Petrochemical Company Limited.

The Group Executive Director, Refining and Petrochemicals, NNPC, Mr. Ian Udoh, stated that the corporation resolved to use indigenous engineers because it could not pay the bills of foreign contractors who were nominated by the original builders of the refineries.

Udoh spoke during a press briefing organised by the corporation to refute claims that it was indicted by the report of the forensic audit carried out on its operations by PriceWaterhouseCoopers.

He said, “For the three refineries, the estimates going with the nominees of the original builders of the refineries would have come up to $1.6bn. But we can’t afford that because we are not going to get any funding from the government for that.

“We examined the work scope and picked up the essential things that we must do to get these refineries to operate optimally at around 90 per cent of capacity. That was done and we did the pricing template; not the international rates, we used the local rates. And everything for the three refineries combined came to around $550m, which is significant, maybe up to 70 per cent reduction.

“Even the $550m is quite much. So, we amortised it over 18 months so that we will be able to swallow it in bits more easily. The 18 months started since last October and this means that early next year, the refineries should be in shape.”

He stated that the original builders of the refineries were not willing to come to Nigeria but nominated their partners to handle the turnaround maintenance of the facilities.

The partners, according to Udoh, are not willing to give post rehabilitation performance guarantee, adding that their prices were exceedingly high.

He said, “So, a new pact had to be taken, which is more affordable for the NNPC, that is, to rehabilitate all the refineries simultaneously, resorting more to what is locally available. And these include the in-house engineers and such contractors that have been working with us all these years who are familiar with the plant.

“Part of that plan is that if there is any challenging big equipment, we resort to the original manufacturers to send a representative to join our engineers on the ground to carry out whatever is needed to be done.”

Earlier in his address, the Group Managing Director, NNPC, Dr. Joseph Dawha, had explained that the $1.48bn, which PwC directed it to remit to the Federation Account, was the balance of the book value of the divested assets that were transferred to the Nigerian Petroleum Development Company, excluding taxes and royalties.

“This value is still being reconciled with the Department of Petroleum Resources,” he added.

He stated that what the DPR sent to the corporation as the estimated value of the assets was $1.847bn, out of which the NNPC paid over $300m as a token to indicate its commitment to acquiring the assets pending resolution and reconciliation by both organisations.

On why the NNPC had not been able to tackle pipeline vandalism despite installing electronic monitoring gadgets on them, the corporation’s Group Executive Director, Engineering and Technical, Mr. Adebayo Ibirogba, stated that the technology might detect immediately where a pipeline had been blown up, but the ability to respond speedily was an issue.

[Punch]

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