A lifeline is coming for Nigeria three ailing oil refineries as a business model has been approved for them by President Buhari. According to the Nigerian National Petroleum Corporation (NNPC), Private investment will now be welcome to partner with the refineries for an effective and optimum production results.
It was gathered that this new commercial model is considered the only option left to save the three refineries at Port Harcourt, Warri and Kaduna from imminent collapse. The details of the approval as unraveling by the Minster of State for Petroleum Dr. IbeKachikwu allowed private and strategic investors with refining and financial expertise to partner local investors who understand Nigeria downstream sector.The partnership between the duos is expected to turn around the refineries so as to attain a higher capacity.
Under the plan, the capital investments from investor are expected to be recouped from the incremental production of the refineries on terms as agreed between parties. In other words, investors are expected to invest, operate for an agreed period in which they will recoup their investment before exiting the business.
Mr. Anibor Kragha, NNPC’s Chief Operating Officer for refineries who briefed the audience in the just concluded National Oil and Gas conference in Abuja insisted that the oil corporation will not sell any equity to the anticipated investors. Rather they will operate on contract management basis.
Mr. Kragha further reveals that preliminaries framework has been undertaken by the nation’s oil firm. In this respect, the oil firm has engaged the original builders of the Port Harcourt and Kaduna refineries to undertake a technical appraisal of the two refineries to enable the framing of the funding model that will be suitable for all parties involved.
The epileptic nature and the low capacity utilization of the Nations three refineries have been a source of worry and embarrassment to the nation. Despite all previous effort including millions of dollars that have been sunk in its maintenance and various turn around maintenance contract, these refineries are still comatose. It is believed that the present government is determined to do it right this time and get the refineries to operate up to 90 percent capacity.
An excited Mr. Kragha stated “we are getting a lot of interests and expressions from a wide range of people including GE, ENI, and OANDO. We will all sit down together with the original builders of these refineries and arrived at an aligned cost that we will put into financial models”