Page 4 - DMEA Week 26 2021

DMEA COMMENTARY DMEA

NNPC MD explains

Dangote investment plans

Nigeria’s state oil firm has explained the intention behind plans to
invest in the mega-refinery being built by Dangote Group near Lagos.

AFRICA NIGERIAN National Petroleum Corp. (NNPC) rehabilitate the 210,000 bpd complex to around
managing director Mele Kyari this week pro- 90% of its nameplate capacity – with utilisation
vided further detail on the intentions behind its rates having run at zero for more than 18 months
WHAT: plan to acquire an equity stake in the new Dan- because NNPC had not carried out turnaround
NNPC has eyes on both gote Refinery. maintenance (TAM) on any of its refineries for
the profit potential of the Speaking to Nigeria’s Channels Television, he decades.
650,000 bpd unit as well said that the investment is driven by the 650,000 During negotiations for that loan, the Cai-
as its ability to provide barrel per day (bpd) plant’s potential to generate ro-based bank insisted that NNPC hire a “pro-
greater energy security profits as well as the importance for the state oil fessional operations and maintenance company”
for the country. firm to be involved in a project of such scale. The to run the Port Harcourt units and the company
refinery is being built in Lekki Free Trade Zone announced soon after it would no longer operate
WHY: (FTZ) near Lagos and is expected to begin com- the facility nor its other refineries at Kaduna and
The company has a missioning by the end of the year, with Dangote Warri.
poor track record in Group saying recently that construction had “For the Dangote refinery,” he said, “we are
refining and is looking to reached 79% completion. not taking government money to buy it, which
reduce its involvement in Last month, reports emerged that NNPC was is the mistake that people are making. We are
downstream facilities to in talks with the African Export-Import Bank borrowing on the back of the cash flow of this
an equity share. (Afreximbank) to borrow around $2.5bn to buy business. We know that this business is viable, it
a 20% interest in the Dangote Oil Refining Co. will work and it will return dividends.”
WHAT NEXT: (DORC). Kyari added: “It has a cash flow that is sustain-
It remains to be seen Kyari explained that the refinery will “deliver able because refinery business, in the short term,
whether Dangote intends over 50mn litres of gasoline into, to be specific, will continue to be sustainable. That’s why banks
to sell a stake in the our markets. We are also working on our refiner- have come forward to lend to us, so we can take
refinery, but NNPC has ies, to ensure that we fix them. We have awarded equity in this.”
made it clear that such the contract for Port Harcourt refinery rehabili- He explained that NNPC is seeking to expand
moves are a key part tation. And ultimately we are going to close that its portfolio, adding that the company has “the
of its new model for of Warri and Kaduna very soon in July so that all responsibility to guarantee energy security for
refining. of them will work contemporaneously.” our country […] that’s why anyone that is going
Afreximbank has already provided $1bn in to construct a refinery that is in the excess of
funding for the Port Harcourt work – which will 50,000 bpd, we will talk to them, take equity in

P4 www. NEWSBASE .com Week 26 01•July•2021