NNPC to repair refineries with $550m

The Turn Around Maintenance (TAM) of the nation’s refineries will cost $550million, the Nigerian National Petroleum Corporation (NNPC) said yesterday.
The corporation blamed the TAM’s delay on the refusal of the original builders of the  four refineries to handle the maintenance contracts.
There are two refineries in Port Harcourt, one in Kaduna and another in Warri. They are all working below capacity, unable to meet the consumption demands of Nigerians.
The Coordinator,  Corporate Planning, and Strategy of the NNPC,  Dr. Tim Okon, told the Senate Committee on Petroleum Resources (Downstream), in Abuja while defending the budget proposal of the corporation, that the NNPC had worked out an alternative local arrangement that  would enable it refine about 400,000 barrels of crude oil daily after the completion of ongoing rehabilitation.
Okon, in company with the Group Managing Director of NNPC, Mr. Joseph Dawah, told the Senators that the corporation could not afford the exorbitant bills for their TAM from the original builders.
Okon said when the corporation invited the original builders from Japan and Italy for the TAM, they declined and instead, they recommended SAIPEM – a foreign firm operating in Nigeria –  to carry out the TAM on their behalf.
He added that while the Port Harcourt and Kaduna refineries were built by two Japanese firms – Chioda and JGC, the Warri Refinery was built by Snapcogetti of Italy.
Okon said: “The refineries would work again at full capacity, we already have plans to bring them back to perform at full capacity.
He added that Saipem which was to carry out the TAM of the Port Harcourt refinery gave the agency a bill of $475m, but  later reduced it to $297million after further negotiation.

  

He said the management considered the prices to be high and decided to look inward by inviting local contractors that are familiar with the facilities and worked with them.
He said, “Going forward, we have been able to reduce the cost of doing the TAM from $550m to $152million.
“We did a similar analysis for the Warri refinery and we brought it down to $180m from the $850million requested by Saipem.
“For the Kaduna refinery it was reduced from $600million to $212million.
“So we have been able to reduce the total cost of the TAM for the  refineries to $550million.
“The exercise which started in October last year is for a period of 18 months and it will be completed in the first quarter of next year.
“The expenditure of $16million a month had been reduced to an average of $10million a month per a refinery.
“By the first quarter of next year,  all the refineries will be functioning optimally and we would be able to refine an average of 400,000 barrels of crude oil per day for local consumption.
“However, another advantage of what we are currently doing is that instead of shutting down the facilities while the TAM lasted, we will be producing even when the rehabilitation work is ongoing.