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

The Federal Government has processed $98 million and N17.2 billion in partial payments for the ongoing rehabilitation of the Port Harcourt Refining Company, it was learned on Friday.

It was also found that the government had made an upfront payment of $194 million, the 15% 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 update of the financial situation of the rehabilitation indicates that the project was financed by an equity contribution from the sponsor and a loan from the lenders (AfreximBank).

The report said the price of the engineering, procurement, construction, installation and commissioning contract remained at $1.397 billion in lump sum with $162 million in provisional sum, bringing the total cost of the project to $1.559 billion, as approved by the Federal Executive Council.

The Federal Executive Council approved the contract for the Port Harcourt Refinery EPCIC on March 17, 2021, and work on the installation began last year.

The board approved the award of the 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 continuation of the factory rehabilitation.

The report states, “A 15% deposit ($194 million, of which 70% in US dollars and 30% in naira) was paid to Tecnimont as a contractual requirement.

“An advance payment guarantee of $300 million has been provided by Tecnimont. Payment for Milestone One (10%) ($98 million and N17.2 billion) has been processed for payment. The project has 14 payment milestones with attached deliverables. »

With regard to the status of rehabilitation, the report indicates that the overall projected cumulative progress of the project is 10.7%, but notes that the actual cumulative progress is 6.3%.

“The contractor should issue a mitigation plan to address this deviation and ensure the project is completed on time,” the NNPC report said.

Some challenges were identified by PHRC management in the report. He said the COVID-19 outbreak with the current Omicron variant has created travel disruptions and supply chain challenges around the world.

Another challenge was concerns on the east-west route and the loss of project man-hours on the route associated with movement to and from the refinery.

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

He said the contractor was complying with the provisions of the Nigerian Content Development Act, adding that there was active involvement of Nigerian companies as contractors in the project.

He indicated that a memorandum of understanding has been signed between the contractor and the community leaders detailing the expectations of the host communities from the contractor.

“There has been no unrest so far due to strong community relations engagement between the owner/contractor and host communities,” the report said.

The start of the Port Harcourt Refinery rehabilitation in 2021 has received praise from industry players and observers, according to the work carried out on the facility.

It was learned that Tecnimont had since mobilized on the site with its subcontractors, a deposit of 15% having been paid to the contractor after the presentation of the guarantee of advance payment.

Refinery officials said the rehabilitation aims to restore the plant to a minimum of 90% utilization of design capacity.

The punch recently announced exclusively that PHRC will supply 11 million liters of Premium Motor Spirit, commonly known as gasoline, to the domestic market. This means that the company should produce around 3.96 billion liters of gasoline per year.

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

The facilities have been idle for several years, refining no crude despite repeated maintenance exercises.

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

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