Nigerians sleepless over NNPC’s old Port Harcourt Refinery rehab

PHILLIP ISAKPA IN MANCHESTER, UK

After a triumphal announcement of the successful completion of the first phase of rehabilitation work on the old Port Harcourt Refinery by NNPC Limited, the scales are falling off tens of millions pairs of eyes across the country as the triumph has failed to meet key expectation of Nigerians based on earlier promises that petrol or premium motor spirits (PMS) will flow from the refinery this December. 

Nigeria has suffered decades of mismanagement of its state owned refineries located in Warri, Kaduna and two in Port Harcourt, the old and new, all of which have not produced petroleum products for several years leading to one of the biggest state-promoted heists in the name of petroleum subsidies paid out to make up the difference between the landing cost of imported petroleum products and the price that government allowed it to be sold at filling stations until May 29 when subsidies were removed by President Bola Tinubu.

Analysts say with different governments doing nothing about fixing the refineries and appearing to support the controversial subsidy payments to importers, they created one of the monsters that have sunk the Nigerian economy to its current state  – on its knees.

Nigerians heaved a sigh of relief two years ago when, under former President Muhammadu Buhari, described by analysts as arguably the worst head of government to manage the Nigerian economy, awarded the contract to rehabilitate the refineries in Port Harcourt. The award of the contract was followed with statements from NNPC Limited containing timelines of when products will begin to flow out of the old Port Harcourt Refinery. The controversial and opaquely managed state-owned oil company had given an end-December 2023 date which had led Nigerians to eagerly look forward to this promise being fulfilled.

At the beginning of December the entire nation went into counting mode, and began counting down to see when the relief would come that the refinery was now back in business. Many Nigerians believe that as an oil producing nation, petroleum products should not be as expensive as they currently are with petrol (or PMS) selling at the pump for over N600 per litre. Now, with the counting over, the management of the rehabilitation exercise by NNPC Limited has run into controversy with NNPC Limited announcing something completely different from what Nigerians had long been waiting for  – the flow of products from the refinery.

In a statement by Olufemi Soneye, its chief corporate communications officer, NNPC Limited said:

“The Nigerian National Petroleum Company (NNPC) Ltd. has fulfilled its pledge of achieving the mechanical completion of rehabilitation work on Area 5 Plant of the Port Harcourt Refining Company (PHRC).

“Rehabilitation work has been ongoing at the Refinery for over two years and the NNPC Ltd. had pledged to complete Phase One of the project (mechanical completion and flare start-up) of Old Port Harcourt Refinery (Area 5) by 31st December 2023.”

This statement has thrown millions of Nigerians out of balance, keeping them sleepless. In particular, they say the NNPC did not lead them to believe that more than two years down the line, it would bury its promise in technical jargon such as “mechanical completion” thereby conveniently avoiding the delivery of products from the refinery to them this month.

The controversy that this NNPC’s new statement has generated has been better captured on social media with one technically knowledgeable person on the subject having this to say:

“This latest press release is a complete obfuscation of the original FEDERAL GOVERNMENT & NNPCL promise!

“The latest terminology, ‘Mechanical Completion and Flare start-up’ were never part of the original definition of NNPCL, as the target to be achieved by December 31, 2023!

“Moreover, this purported achievement advertised has no practical effect  on the public expectation, which was that the older, 60,000b/d refinery would start production  for local consumption!

“That flare start-up operation carried out during the visit of the minister, board members and CEO of the NNPCL was an abnormal operation at this stage of the work, because it was completely unnecessary, as  there was actually no waste or flue gas being generated from the refinery! No crude oil had been introduced into the refinery and therefore no flue gas would be available for burning in the flare stack!” The writer stated.

The author went on to allege as follows: “However, because the refinery had not and could not start operating, imported LPG fuel was deliberately used to start the flare for a few minutes’ photo-up and celebrations seen in the advertised video. To the uniformed public, this would create the misinformation that the refinery had actually started production!”

Analysts say if this allegation is correct, it would not be just ‘misinformation’ but that it bothers more on criminal breach of trust. 

The author of the statement informed Nigerians that “the  true position of the work in the refinery is that construction is still in progress.”

According to the writer, “Mechanical completion can only be achieved, if and when all the progress statistics quoted in the NNPCL press release had reached 100%. Only thereafter can testing and commissioning of the refinery begin.

“The last stage of successful testing, followed by commissioning allows crude oil to be introduced into the crude unit. Until that happens no products can be expected from the Port Harcourt Refinery!

“From the analysis of the information published so far it does not appear that the refinery can start any production in the foreseeable future. It is also noteworthy that the main contractor, TECHNIMONT  did not promise any mechanical completion or production start-up dates!”

The author said to further moderate the huge expectations of Nigerians and the trust they had placed on NNPC Limited at least two years ago when it said the products will start flowing from the old Port Harcourt Refinery after it would have been rehabilitated in two years.

The setting for the unfolding controversy now surrounding the refinery rehabilitation followed from the public countdown that began this December and the eventual visits to the refinery by government and NNPC top echelons. 

Speaking during the inspection tour of the rehabilitation project, which also coincided with the 15th Refineries’ Rehabilitation Steering Committee Meeting, Mele Kyari, group chief executive officer, NNPC Ltd. said, as of December 15th, 2023, 84.4 percent of Area 5 Plant, a key component of the Refinery, and 77.4 percent of the entire rehabilitation project have been completed.

It is important to note that this is not the first time efforts have been made to rehabilitate the Port Harcourt Refinery. In the past, previous attempts to repair and modernise the facility have been unsuccessful.

NNPC sources argue that the completion of the first phase of the rehabilitation project is considered a significant achievement as it allows for the restart of the refinery’s operations. This includes mechanical completion, which is the stage where all of the refinery’s equipment and systems are tested and commissioned. This is followed by the flare start-up, where the refinery is brought online and the first hydrocarbon is introduced into the system.

Once the first phase is completed, the refinery is expected to commence  operations at a partial capacity by December 31, which will be a major step forward in the rehabilitation process.

“In our quest to ensure that this refinery is re-streamed to continue to deliver value to Nigerians, we made a promise that we will reach a mechanical completion of phase one of the rehabilitation project by the end of December and get the other plants running in 2024. Today, we have kept those commitments,” Kyari stated.

The GCEO commended the NNPC Ltd.’s staff and the EPCIC contractors for doing a great job in ensuring that the refinery achieved that significant milestone.

Pius Akinyelure, chairman of the NNPC Ltd board, described the progress made on the rehabilitation project as “historic” and congratulated the NNPC staff and management team for their hard work and dedication. He said that the board was proud of the progress that had been made so far and was confident that the entire project would be completed on schedule.

“We are just starting. We want to be at the highest level of production so that we will keep the prices of petroleum prices in the country stable in order to give comfort to our people and generate more revenue for our country,” Akinyelure noted.

Also speaking, Heineken Lokpobiri, the minister of state for petroleum resources (oil), said the milestone is another landmark of the renewed hope agenda of President Bola Ahmed Tinubu. He thanked Nigerians for their patience and the trust they have in NNPC Ltd.’s ability to deliver on this huge project.

In his address, Ekperikpe Ekpo, the minister of state for petroleum (gas), said re-streaming the refinery will herald a good omen for the nation’s Liquefied Petroleum Gas (LPG) industry, as LPG, also known as cooking gas, is a major bye-product of the Refinery.

Fabio Del Cioppo, the managing director of Tecnimont Nigeria Limited, one of the EPC contractors of the rehabilitation project, said his company remains committed to fulfilling the terms of the contract.

The PHRC rehabilitation project, which costs about $1.5 billion, is an EPCIC project that covers engineering, procurement, construction, installation, and commissioning phases. For Area 5, the engineering, procurement, construction, and installation have all been completed. The mechanical completion signifies the closure of the construction and installation phases.