News - Oil & Gas - April 7, 2021

Award of Warri, Kaduna Refineries Rehab EPC contract for June

As NNPC, Tecnimont SpA seal deal to commence work on the $1.5billion contract for the rehabilitation of Port Harcourt Refinery

The commitment by the Mele Kyari-led management at the Nigerian National Petroleum Corporation (NNPC) to increase Nigeria’s domestic refining capacity and end importation of petroleum products effectively commenced on Tuesday with the contract for the rehabilitation of the 210,000 barrels per day capacity Port Harcourt Refinery in Alesa-Eleme, Rivers State.
In his inaugural speech as the 19th Group Managing Director of NNPC, Mele Kyari, gave Nigerians a promise and commitment to “deliver on the rehabilitation of the nation’s four refineries within the life of this administration.
Kyari said his promise would be delivered through the building of strategic partnerships to transform Nigeria from a net importer into a net exporter of petroleum products.”
As part of that promise, the Minister of State for Petroleum Resources, Timipre Sylva recently announced the approval by the Executive Council of the Federation (FEC) of $1.5billion for the rehabilitation of the first of the four refineries in the country.
Although critics of the plan have described the plan as a “wasteful misadventure”, the NNPC appears determined to forge ahead with the exercise.
The formal signing of the EPCIC contract between NNPC and the Italian technical contracting firm, Tecnimont SpA on Tuesday in Abuja marked the effective take off of the  contract.
At the contract signing event held at the NNPC headquarter, Kyari reaffirmed the rehabilitation of the Port Harcourt Refinery project has a completion timeline of  between 18 and 44 months under a three-phase arrangement.
Kyari also clarified that the contract awarded to Milan-based Tecnimont SpA at a lump sum contract price of $1.5 billion, also included value added tax  (VAT) charge and other statutory payments to the Nigerian government.
Feeling elated about the commencement of the contract despite stiff opposition and calls for its halting, the GMD of the NNPC described the PHRC rehabilitation project as a dream come true.
He said the project was in line with President Muhammadu Buhari’s promise to the Nigerian people to make the refineries work during the lifespan of his administration.
Kyari restated that in arriving at the choice of Tecnimont SpA as technical partner and the contracting firm, the Corporation embarked on a transparent tender process he believed would withstand any forensic audit by any group.
The NNPC, he said, was ready and open to answer any questions pertaining to either the award of the contract or the execution of the project.
He used the occasion to announce plans to carry out similar exercises on both Warri and Kaduna Refineries, with their EPCIC contracts scheduled to be awarded  by the NNPC in June 2021. 
The NNPC GMD assured that the same transparent process involving the award of the contract for the rehabilitation of the Port Harcourt Refinery has been put in place for those two Refineries
Providing further details on the shape the rehabilitation exercises would take, Kyari explained that they would be “very different from a routine Turnaround Maintenance (Tam) that Nigerians are familiar with in the past.”
“This rehabilitation exercise would entail a total retrofitting of the plant with major operational parts and equipment replaced with brand new ones to ensure optimal performance,” he said. 
The Managing Director of Port Harcourt Refining Company Limited, Ahmed Dikko, explained that Phases 1 and 2 of the rehabilitation project would prepare the refinery to receive hydrocarbon, while Phase 3 would focus on the start-up of the refinery for normal operations.
Dikko said from the programme of the rehabilitation exercise, the entire work is expected to be delivered in 44 months from the date of commencement of the contract. 
Vice President, Sub-Saharan Africa Region of Tecnimont SpA, Davide Pelizzola, pledged the readiness of his company to work assiduously with the NNPC to deliver on the terms and obligations of the contract.
The signing ceremony of the PHRC rehabilitation project was witnessed by the Nigeria Extractive Industries Transparency Initiative (NEITI), Infrastructure Concession Regulatory Commission (ICRC), Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers NUPENG amongst others.
The involvement of Tecnimont SpA in the repairs and maintenance of the Port Harcourt Refinery is not new.
During the Umaru Yar’adua administration between 2008 and 2010, all the four refineries in Port Harcourt, Warri and Kaduna were shut down for a comprehensive TAM.
To prepare the Port Harcourt Refinery for the Tam, the Federal Government hired the Italian firm to conduct a six weeks technical audit of equipment at the plant ahead of the TAM.

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