FG approves fresh refineries revival model targeting 90% efficiency in 24 months
As the 2017 Nigeria Oil and Gas Conference and Exhibition (NOG) ends today, the Federal Government has unveiled a new commercial model that may not be far from guided privatization by bringing in investors who can partner with government to push three of the refineries to 90 per cent efficiency in two years. They include Kaduna, Warri and one of the two Port Harcourt plants.
This was the revelation of Mr Anibor Kragha, Chief Operating Officer (COO) Refineries, Nigerian National Petroleum Corporation (NNPC), on Wednesday in Abuja at a plenary at the ongoing of the NOG.
In his presentation based on ‘Harnessing the Opportunities in Nigeria’s Downstream Sector’, he said under the new model, President Muhammadu Buhari also approved the engagement of strategic investors who are ready to invest their money and within 24 months get us to 90 per cent capacity utilisation.
He averred that “As a result of what is happening and the global trend, President Muhammadu Buhari gave approval for strategic investments to be made in the refineries.
“So the investment model is basically this way, strategic investors who can bring refining expertise and funding will partner with local partners who have downstream experience to actually go into the refineries.
Key aspect of the new model would be that investors would be repaid from incremental production of the refineries on prior agreed terms.
But to achieve the emerging plan, Kragha argued that “Government needs to first draw on funds latest by July, which is the only way we can meet the 24-month timeline”.
“What we are doing now is that in parallel, we are doing evaluation of the technical stuff and we are going to engage financial advisers to start building a model.
“I will like to reiterate that there is no mandate to sell any equity in the refineries; we are not selling anything.
“This is just a strategic investment for a defined period, after which they recover their capital negotiated with term and that will help us ramp up very quickly in the next 24 months.’’
He revealed that government had linked up with builders of the Kaduna and Port Harcourt refineries who assured of cooperation in the new model.
