Refinery: How Contractors Milked FG Of Billions Under Guise Of Turn Around Maintenance


LAGOS OCTOBER 8TH (NEWSRANGERS)-Indications have emerged that Nigerians may have to wait a little longer before locally refined petroleum products would be available in order to halt the rising cost of imported fuel, which landing cost is currently put at N720 per litre. This is due to the fact the four refineries of Warri, Kaduna and two at Port Harcourt are far from being ready, even though the Federal Government awarded contracts for their rehabilitation.

It would be recalled that the Nigeria National Petroleum Company NNPC) Ltd, last year signed a Memorandum of Understanding( MoU) with Dae- woo Group, a South Korean conglomerate, for the rehabilitation of Kaduna Refinery. At the contract signing ceremony, Vice President, Downstream Sector of the NNPC, Adeyemi Adetunji, said the quick fix strategy guarantees the fastest route streaming the Warri Refinery and Petrochemicals Company Limited (WRPC) and Kaduna (KPRC) for in – country production of refined petroleum products.

He said: “Restoring WRPC and KRPC to operation will guarantee energy security for the country and reduce dependence on imported products in view of near total dependence on the supply of imported petroleum products and the impact the ongoing Russia – Ukraine war is having on global supply. “Also, this will generate revenue, reduce demand for forex, supply raw materials to industries, create employment for Nigerians, and ensure technology transfer amongst other benefits.”

Adetunji noted that the NNPC is repairing the refineries with a combination of internally generated revenue and third party financing.’ In August 2021, the Federal Executive Council (FEC) approved $1.48 billion for the rehabilitation of both Warri and Kaduna Refineries. In January this year, former Minister of State for Petroleum Resources, Timipre Sylva, expressed the hope that Nigeria may stop the importation of petroleum products by the first quarter of 2024.

Sylva said the Port Harcourt Refinery which has capacity of 60,000 barrels per day ( BPD) will partially be restored and ready for operation by the first quarter of 2023. In addition, he said that the several modular refinery projects in the country, the 650,000 barrels per day Dangote Refinery is also expected to be operational by the end of 2023. According to him, with the combined production capacity of the Port Harcourt Refinery, Dangote Refinery and other Modular refineries, Nigeria would end the importation of petroleum products soon.

However, this has remained a mirage as the roll out dates have been postponed severally. For instance, the Q2 2023 date fixed for the PHR to be back on stream even at 64 percent capacity in January this year, has since passed without any product from the state owned refinery. Those, who should know confided in Sunday Telegraph, that this is usually due to unforeseen circumstances normally beyond the control of the opera- tors of such refineries.

An engineer with Dae- woo, the company contracted to rehabilitate the Kaduna Refinery said that in Kaduna, they are yet to start any major work. Our Source, who spoke on condition of anonymity, due to the sensitive nature of the matter said: “As a matter of fact, we are yet to mobilise to site for work. “Since February, when we started preliminary work, there was no office for the staff that will work on the refinery.

“When we got there, we had to make do make- shifts as offices. “We had to do an audit of what we need to do, checking at the pipes, taking measurements and diameters. “Most of the pipes are bad. The Kaduna Refinery is a Carcass; nothing was done in terms of Maintenance. All the so called TAM (Turn around Maintenance) of the past was nothing but scam and heist. The money went into private pockets. “There was the case of one company, which won the contract to repair a boiler.

The contractor, after being mobilized, moved in to dismantle the boiler, only to ask the NNPC for an upward review of the contract. NNPC refused to pay. That was how the repair was abandoned and everything deteriorated.” Our Source continued: “For now, we have taken an audit of what we need to do and how we are going to do it. This, we did through Laser Scanning (Engineering drawing of the entire refinery.)

It affords us the opportunity of turning it around in different dimensions to see how best to go about it. “For now, most of the parts of the refinery are out- dated. They are no longer being manufactured. They have been phased out. “So, what we will do now is to get an alterna- tive, which will perform the same function. Take for instance a boiler. An entire new brand will be brought in to replace the old one.”

How did things get so bad? “Our leaders’ personal interests outweigh that of the national interest. They think of their own interest first and collude with contractors to defraud the government. “In most cases, the contracts are awarded to cronies and allies, who they cannot bring to book if they fail to execute the contract to the letter. “Except for a few governors like Akin Ambode did in Lagos. He brought in contractors who he knew would perform and they did.

He lost the ticket for the second term because he shut the door against contractors, who would collect government money and refuse to work.” Would the situation not repeat itself with the current situation? “No! The situation is different. The current arrangement does not allow for that. This is funded through PPP (Public Private Partnership). “The contractors are part of the funding and they can only recoup their money if the refinery is up and running.

“They will run the refinery for some time after they might have made their money and they will hand it over to the government.” Our Source cannot be wrong. Daewoo Engineering Construction Nigeria Ltd, saddled with the responsibility of getting the Kaduna Refinery up and running again is a subsidiary of Daewoo E and C Company LTD of South Korea, has a share equity of 90 per cent in South Korea and 10 per cent in Nigeria. NNPC at the signing ceremony said the project will be completed in three packages as maintenance, services contract by Daewoo Nigeria over a period of 21 months at a maximum coat of $704.6 million.

“It is the pervading rot in business in Nigeria which has brought us to this pass. How much does it take to construct a brand new Refinery like Dangote is doing? Nigeria has spent over $25 billion to repair refineries whose total capacity is not half of Dangote’s 600,000 barrels per day capacity, which is less than $17 billion.” The 110,000 bpd-capacity Kaduna Refinery is one of Nigeria’s four dysfunctional refineries that have produced no fuel for years, leaving the country to rely on imported petroleum products.

It recorded a N22.9 billion loss in 2021. Dangote too is dealing with its own unforeseen circumstances as the pipes have to be tested well to ensure that they can withstand the required temperatures at which products come out.” For now, the waiting game continues for Nigerians.


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Posted by on Oct 8 2023. Filed under National. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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