Page 5 - AfrOil Week 06 2023

AfrOil COMMENTARY AfrOil

Kaduna contract minority shareholding in the modular refiner-
Meanwhile, progress is also anticipated at the ies, that at present are the only operational refin-
smaller Kaduna refinery, with South Korea’s ing assets in the country.
Daewoo Engineering & Construction Co. As Sylva noted last week: “We have issued
awarded a $741mn deal to rehabilitate the asset licences to prospective investors for the estab-
in early February. NNPCL said that a mainte- lishment of refineries, some private operators
nance service contract had been agreed, provid- established modular refineries like Waltersmith,
ing for Daewoo to restore production at the idle Azikel, Anoh [gas plant], Duport Midstream,
110,000-bpd facility to at least 60% of its previ- while existing refineries are being rehabilitated.” Sylva also
ous capacity by the end of 2024.
The NNPCL aims to finance Daewoo’s work NNPCL push spoke out
at Kaduna through a mixture of third-party Sylva has also spoken out about the importance about the
financing and its own revenue, though no lend- of overhauling the refining sector to provide a
ers have yet been revealed. more sustainable solution to the issue of fuel importance of
Confusingly, in August 2021 contracts were subsidies, which has plagued the Nigerian econ-
awarded to Italy’s Saipem and subsidiary Saipem omy for years. overhauling
Contracting worth a total of $1.485bn – $587mn “As a country, it is a national consensus now
for Kaduna and $898mn for NNPCL’s other that this subsidy is not sustainable; what is desir- the refining
refinery at Warri – that entail a three-phase able is to ensure that petroleum price is market sector to
approach to rehabilitating the refineries over 77 driven and it will also drive investments from
months. the private sector,” he said. resolve the
Upon the commissioning of Port Harcourt He added that the government continuing
and Kaduna, as well as another refinery in Warri, to provide subsidies would threaten the prof- issue of fuel
the NNPCL said it would run the facilities using itability of functional refineries, urging the
“outside contractors.” This was one of the condi- government to end subsidies altogether and subsidies
tions of the aforementioned Afreximbank loan instead spend the billions of dollars saved on
– taking into account the company’s miserable infrastructure projects that would support the
recent track record in refining. local economy. “Let us remove subsidy so that
NNPCL’s CEO Mele Kyari said in an Abuja the government will have more money to deploy
briefing in August 2022 that the company “plans to the development of things that will be useful
to take back control of the refineries, run them to all of us as a country,” he said.
as a business and repay the loans obtained for However, we have been here before and
their rehabilitation through the refineries’ the combination of popular revolt against dra-
productivity.” matically higher pump prices and lobbying by
powerful oil marketing companies have made
Minority shareholdings previous efforts short-lived.
The company acquired a 20% stake in the The launch of Dangote and the rehabilita-
650,000-bpd Dangote Refinery complex under tion of NNPCL’s wholly-owned assets, despite
construction outside Lagos, which after years likely spread over several years, present a fresh
of delays and cost overruns is expected to enter opportunity for Nigeria to finally rid itself of
production this year. subsidies while limiting the pain in the pockets
Meanwhile, NNPCL has also assumed a of its people. ™

The Dangote Refinery is expected to begin operating this year (Photo: NMDPRA)

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