People & Money

Proposal For Rehabilitation of Kaduna and Warri Refineries Now Before FEC for Approval

The proposal for the rehabilitation of the Warri and Kaduna Refineries are now before the Federal Executive Council for approval, a source close to the Ministry of Petroleum Resources has said.

It is expected that as soon as the federal executive Council approves the proposal, activities leading to a major revamping of the two refineries would begin.

The revamping of the strategic assets are so critical to Nigeria’s a plan to meet its domestic fuel obligation in the country. The country currently import all her Premium Motor Spirit or petrol needs.

kaduna and Warri Refineries’ rehabilitation which are expected to be awarded this month according to Mele Kyari, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) would be completed and would  start production almost  at the same time as the already awarded Port-Harcourt Refinery.

The Kaduna Refinery has capacity for 110,000 barrels per day while Warri has capacity for 125,000 per day

The NNPC boss when he spoke to media outfits around June 29, 2021, said: “kaduna and Warri Refineries’ rehabilitation which will be awarded in July will be completed and started production almost the same time as the already awarded Port-Harcourt Refinery. NNPC aims to sign engineering, procurement and construction (EPC) contracts for the facilities within the next three weeks. ”

Also Read: Nigeria Embarks on Yet Another Oil Refinery Rehabilitation

According to him, the funds to be used   for the rehabilitation works would not  come  from the  federal  Government, but instead, NNPC will instead secure bank loans and repay them through the facilities’ cash flows.

The same process will be applied to secure the purchase of a 20pc stake in the 600,000 b/d Dangote refinery. Lenders are evaluating investment in this facility, which will start producing in 2022, he said.

In the words of the NNPC boss, as the national oil company of the country we have the responsibility to guarantee energy security.  Explaining the reason, behind the investment, he stated that it would be impossible for any country to watch a business of this magnitude and sensitivity to run without the involvement of a national company.

NNPC is also considering the construction of five condensate refineries, which will provide a cheaper alternative to produce light-end products. NNPC aims to reach final investment decisions on two, which will have a combined 200,000 b/d of condensate refining capacity, within the next three months.

“They are cheaper and faster to construct and they will also take off the burden of the Opec+ crude output restrictions,” Kyari said.

Throwing more lights on the issue of under-recovery payment, Kyari said the payment for differential cost between the actual landing cost and pump price rate was affecting NNPC’s remittance to the Federation Account.

“We are supposed to remit N120 billion to the Federation Account every month.

Speaking further he stated though pump price of petrol should have been N256 per litre based on what the price was as at June 2021. However despite the current crude oil price, the federal government through the NNPC is still paying the differential until an appropriate price is agreed upon by government and Labour.

NNPC also mull over construction of five condensate refineries, which will provide a cheaper alternative to produce light-end products. NNPC aims to reach final investment decisions on two, which will have a combined 200,000 b/d of condensate refining capacity, within the next two months.

Also Read: NNPC Boss Clears Air On Equity Purchase in Dangote Refinery

The Federal Executive Council approved a $1.5 billion for the rehabilitation of the 210,000 b/d Port Harcourt refinery earlier this year.

He said though the Port Harcourt Refinery had a completion timeline of 40 months, crude oil refining would start there in 18 months January 2023.

On under-recovery payment, Kyari said the payment for differential cost between the actual landing cost and pump price rate was affecting NNPC’s remittance to the Federation Account.

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