NNPCL and Daewoo Construction Company Sign $740 Million Contract For Repair Of Kaduna Refinery

NNPCL and Daewoo Engineering Construction have entered into an agreement for prompt repairs of the Kaduna Refining and Petrochemical Company through a maintenance service contract. The GCEO of NNPCL, Malam Mele Kyari, and the CEO of Daewoo E&C Nigeria, Mr. Jung Taewon, signed the contract on behalf of their organizations.

The deal will cost $740 million and restore the refinery to 60 percent of its nameplate capacity by Q4 2024.

Speaking on the deal, Mele Kyari noted that Nigeria’s economic growth requires energy sufficiency which would be assured by restoring local refining capacity. 

“There is no way a developing country will talk about energy transition without talking about petroleum products. We understand engagements and conversations around energy transition but we need the liquids of today.

“The only way we can guarantee that is to have local refining capacity restored. We are conscious of the fact that our four refineries in three locations are down now, undergoing a rehabilitation process.

“Port Harcourt is on course, Warri is also on schedule and we are committing to this Kaduna refinery. Ultimately our 18 million litres per day gasoline production capacity will be restored.

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“This will also complement the production start of Dangote refinery which we have 20 percent equity, we are hopeful that Nigeria will be self-sufficient in the supply of petroleum products, particularly gasoline in 2023,” He noted. 

In a statement that expressed hope for the project to be delivered on schedule and assured the company of safety and security, Kyari said there would be no risk to its personnel in the course of carrying out their duties. 

According to Mr. Yemi Adetunji, Executive Vice President, Downstream, NNPCL, this development marked a milestone in the refinery’s history since the last Turn Around Maintenance (TAM) was conducted 15 years ago. After extensive engagement with Daewoo on the Quick-Fix strategy, Adetunji said the project was framed for repair and re-streaming KRPC while ensuring 60 percent capacity utilization. 

Yemi Adetunji noted, “This project shall be executed in three work packages as a maintenance services contract by Daewoo E&C Nigeria Limited at an estimated maximum cost ceiling of $740.6m with a duration of 21 months.

“The Quick-Fix strategy guarantees the fastest route to restreaming WRPC and KRPC for in-country production of refined petroleum products. Restoring WRPC and KRPC to operation will guarantee energy security for the country.

“It will reduce dependence on imported petroleum products in view of near total dependence on the supply of imported petroleum products and the impact the ongoing Russia-Ukraine war is having on global supply,”

Adetunji added that the project would generate revenue, reduce demand for foreign exchange, and supply raw materials to industries. He also noted it would also create employment for Nigerians, and ensure technology transfer and other benefits. He also noted that NNPC Limited was using a combination of internally generated revenue and third-party financing to fix the refineries. 

“Post rehabilitation of the three Refineries, globally reputable Operations, and Maintenance (O&M) contractors shall be engaged to run the refinery Safely, Reliably, Sustainably, and Profitably.

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“I wish to implore total commitment from all staff in ensuring that this project is successfully executed as over 200 million Nigerians are looking up to NNPC Limited to deliver on this mandate.

“The Board and Management of NNPC Limited are fully committed to providing all the required support to ensure that the refineries are repaired and back in operation on cost and schedule,” He added. 

At the same time, he noted that the PHRC rehabilitation project was making considerable progress, stating that 64 percent of the old refinery had been repaired and that it should be back in operation by Q2 2023, while 59 percent of the entire project had been completed. Meanwhile, he reported that the WRPC Quick-fix Project was 28 percent complete and expected to be restored by the end of 2023.