FG pays $194m for Port Harcourt refinery, plans additional $98m, N17.2bn

The Federal Government has processed $98m and N17.2bn as partial payments for the ongoing rehabilitation of the Port Harcourt Refining Company, it was learnt on Friday.

It was also gathered that the government had made an initial payment of $194m, being the 15 per cent advance payment required for the rehabilitation of the facility, to Tecnimont SpA of Italy.

A report obtained by our correspondent from the Nigerian National Petroleum Company on the financial status update of the rehabilitation said the project was financed by an equity contribution by the sponsor and loan by lenders (AfreximBank).

The report indicated that the Engineering, Procurement, Construction, Installation and Commissioning contract price remained at $1.397bn lump sum with $162m as provisional sum, bringing the total project cost to $1.559bn, as approved by the Federal Executive Council.

The Federal Executive Council approved the contract for the EPCIC of the Port Harcourt refinery on March 17, 2021, and work on the facility commenced last year.

The council approved the award of PHRC EPCIC contract to Tecnimont in March, and the contract agreement was signed on April 6, 2021, as the report seen in Abuja on Friday indicated that additional funds had been processed to ensure the continued rehabilitation of the plant.

The report said, “Advance payment of 15 per cent ($194m with 70 per cent in US dollars and 30 per cent in naira) has been paid to Tecnimont as a contractual requirement.

“Advance payment guarantee of $300m has been provided by Tecnimont. Milestone One (10 per cent) payment ($98m and N17.2bn) has been processed for payment. The project has 14 payment milestones with deliverables attached.”

On the status of the rehabilitation, the report said the overall project cumulative planned progress was 10.7 per cent, but noted that actual cumulative progress was 6.3 per cent.

“Contractor is to issue a mitigation plan to address this variance and to ensure that the project is completed within schedule,” the NNPC report said.

Some challenges were identified by the PHRC management in the report.

It said the COVID-19 outbreak with the current Omicron variant had created travel disruptions and supply chain challenges worldwide.

Another challenge was the concerns on the East-West Road and the loss of project man-hours on the road associated with movement to and from the refinery.

The report, however, maintained that the project completion period for the entire rehabilitation work was 44 months from effective date, which was April 6, 2021.

It said the contractor was complying with the provisions of the Nigerian Content Development Act, adding that there was active participation of Nigerian companies as sub-contractors in the project.

It said a Memorandum of Understanding was signed between the contractor and community leaders detailing expectations by the host communities from the contractor.

“There has been zero unrest so far due to the robust community relation engagement between owner/contractor and the host communities,” the report said.

The commencement of the rehabilitation of the Port Harcourt refinery in 2021 received commendations from industry players and observers, going by the work being done at the facility.

It was learnt that Tecnimont had since mobilised to site with its sub-contractors, as 15 per cent advanced payment was made to the contractor after the submission of advance payment guarantee.

The managers of the refinery said the rehabilitation was aimed at restoring the plant to a minimum of 90 per cent nameplate capacity utilisation.

The PUNCH exclusively reported recently that the PHRC would supply 11 million litres of Premium Motor Spirit, popularly called petrol, to the domestic market.

This means the company is expected to produce about 3.96 billion litres of petrol annually.

The PHRC and two other refineries, Warri Refining and Petrochemical Company and Kaduna Refining and Petrochemical Company, are under the management of the NNPC.

The facilities have been dormant for several years, refining zero crude despite repeated turnaround maintenance exercises on them.

But industry stakeholders are optimistic that the ongoing rehabilitation of PHRC would yield the desired result and enable the facility to pump out refined petroleum products domestically.

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