Page 5 - DMEA Week 31 2021

DMEA COMMENTARY DMEA

run the Port Harcourt units and the company prepare for an overhaul, but this was only kicked
announced soon after it would no longer operate off last month.
the facility nor its other refineries at Kaduna and In a press release, the company said: “The
Warri. While NNPC is understood to have been declining operational performance is attributa-
considering restructuring its approach to refin- ble to ongoing revamping of the refineries, which
ing for some time, Nigerian industry sources is expected to further enhance capacity utilisa-
told Downstream MEA (DMEA) that this was tion once completed.”
sped up by the pressure from Afreximbank. In mid-July, NNPC said that works on Port
With this in mind, it may come as some sur- Harcourt were in full swing, noting that the
prise that Afreximbank would consider support first refined products following the repairs are
NNPC’s involvement in a private sector facility expected to be delivered by September next
just a few months later. year. It will come back on stream in stages, with
However, the bank already has a deep rela- the full project not anticipated to be completed
tionship with Dangote, having provided a sev- until late 2024, when it should reach 90% of its
en-year, $650mn loan in 2018 for the refinery’s 210,000 bpd nameplate capacity.
development. The works are being carried out by Italy’s
Speaking in July that year, President and CEO Maire Tecnimont under a $1.5bn deal that will
Aliko Dangote said that lenders would provide encompass three phases, with the first phase to
around $3.15bn of the roughly $15bn cost of bring the unit back to 90% nameplate capacity
building the refinery, including $150mn from within 18 months, the second to be completed
the World Bank’s private sector arm. within 24 months and the final stage within 44
The deal with Afreximbank had been signed a months.
week or so earlier and followed a memorandum Meanwhile, Sylva noted that the Cabinet
of understanding (MoU) signed between the has approved the award of contracts to upgrade
parties in June 2017 which provided for credit the Warri and Kaduna refineries to Saipem and
facilities of up to $1bn to be extended to Dangote Saipem Contracting for $1.484bn.
Industries and its subsidiaries, and for broader The news may go some way to appeasing the
fund-raising collaboration on the basis that the host communities that this week urged NNPC
proposed plant would “boost intra-African trade to fix the former facility as quickly as possible.
volumes, enhance continental value chains, The Itsekiri host communities urged NNPC’s
and increase production and export of goods Warri Refining and Petrochemical Co. (WRPC)
and services across Africa”. Dangote Group subsidiary to carry out an extensive clean-up of
also became a shareholder in Afreximbank in the four surrounding rivers.
2016 after making a “substantial investment” to According to local media reports, they
acquire equity. accused WRPC and Nigeria Gas Co. of having
polluted the rivers since December 2019.
Financials show refining losses In June, NNPC’s managing director Mele
Meanwhile, NNPC also provided its financial Kyari said: “The Warri and Kaduna (refineries)
statements for the 13 months to February 2021, will catch up with the Port Harcourt process
which showed that it made a loss in each of those because we have learnt from the Port Harcourt
months as refinery utilisation remained at 0%. mistakes we made. So we are hastening the pro-
The losses fluctuated between NGN5bn and cess so that they can run concurrently. In the
NGN10bn ($12bn-24bn) per month to give a end, we will deliver all of them about the same
total loss of $253mn, with the firm highlighting time.”
that it had continued to pay operating expenses He added: “Very soon, we will do the same [as
for the inactive facilities. at Port Harcourt] for Warri. Completion may be
NNPC has repeatedly said that its full 445,000 40 months away, but production will start much
bpd capacity across four refineries was shut in to earlier than that.”™

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