NNPC seeks $1 billion to refurbish Port Harcourt Refinery which posted losses 5 years in a row

THE Nigeria National Petroleum Corporation (NNPC) is seeking to raise $1 billion from several trading firms with the option of a prepayment plan to revamp its largest refining complex situated in Port Harcourt.

This was revealed in a Reuters report, which hinted that  the overhauling of the entire refinery would reduce Nigeria’s huge fuel import bill if the financing was concluded,.

Funding for the rehabilitation of the refinery is expected to come from a consortium of investors to be led by Cairo-based Afreximbank marking a second major oil-backed financing for the country since COVID-19 pandemic.

“Afreximbank is looking into a facility for the refurbishment of the Port Harcourt Refinery. However, the borrower is yet to be determined,” a source told the Reuters.

The money will be repaid over seven years through deliveries of Nigerian crude and products from the refinery once the refurbishment is complete, the sources stated.

However, the NNPC 2018 annual financial accounts show that the three major refineries reported a combined loss of N154.4 billion, with Kaduna refinery posting zero revenue.

It also revealed that the Port Harcourt Refinery marked a slump in its revenue estimated at N1.5 billion in 2018, indicating a 69 per cent drop compared to its earnings of N4.8 billion in 2017.

The Port Harcourt Refinery posted losses totaling N206 billion for five consecutive years starting in 2014, while a breakdown of its administrative expenses incurred within the period comprising salaries, guest house costs, overhead costs and others stood at N106 billion.

Nigeria is faced with the prospects of dwindling demand for oil as the country prepares to cut down oil production cost to $10 per barrel in 2021, from $15 to $35 per barrel last year, according to a report by S & P Splatts.

A PricewaterhouseCoopers 2020 report on Africa Oil and Gas Review stated that the top five oil majors in Africa experienced a $20 billion loss in export revenue in 2020, seeing an 11 per cent decline in production from 5.3 million barrels in 2019 to 4.2 million barrels in 2020.

Nigeria currently has four refineries with a combined capacity of 445,000 barrels per day located in Kaduna and three others in the Niger Delta cities of Warri and Port Harcourt. The Port Harcourt complex consists of two plants with a combined capacity of 210,000 barrels per day.

Amos Abba is a journalist with the International Center for Investigative Reporting, ICIR, who believes that courageous investigative reporting is the key to social justice and accountability in the society.

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