NNPC seeks $1bn advance payment for crude sales to renovate ailing refineries

*As the Nigerian National Petroleum Corporation plans to build two new condensate refineries, the funding will help the Corporation to conduct a long-standing overhaul of the assets and reduce the country’s wholesale dependence on fuel importation: Report

Isola Moses | ConsumerConnect

In an attempt to conduct a long-standing overhaul of the asset and scale down Nigeria’s heavy dependency on imported fuel, the Nigerian National Petroleum Corporation (NNPC) is said to be in negotiation with oil traders to source $1 billion in advance for crude oil payment to revamp its largest but ailing refinery located in Port Harcourt, Rivers State capital.

Citing seven sources close to the matter Thursday, January 7, 2021, Reuters reports the funding will help the Corporation to conduct a long-standing overhaul of the assets and reduce the country’s wholesale dependence on imported fuel.

By implication, the country will be taking its second oil-supported funding since the outbreak of the pandemic, which has complicated the process of attracting investors at a time fuel demand is taking a hit from lockdowns and renewable energy drawing more patronage from users than fuel from hydrocarbons, report stated.

Sources further noted that repayment of the funding to be spearheaded by Afreximbank, would come over a seven-year period by way of supplies of crude and products from the refinery when the rehabilitation is over.

Spokesperson of the Corporation said: “Afreximbank is looking into a facility for the refurbishment of the Port Harcourt Refinery. However, the borrower is yet to be determined.”

A raft of international and local trading houses, also comprising some firms with previous Nigerian work experience, but which do not want their names mentioned, are being engaged in talks, sources said.

It is also noted that Nigeria’s four state-owned refineries have a total capacity of 445,000 barrels per day (bpd) in Warri, Kaduna and Port Harcourt, which has two plants.

The refineries posted losses coming to N167 billion in 2019, when the Warri refinery did to refine any crude, and the state oil firm’s facilities were shut down in April 2020, preparatory to the rehabilitation.

The NNPC was reported to have shelved a bid two years ago to engage oil producers, traders and engineering companies to finance refurbishments following over a year of negotiation, saying it would finance the revamps itself.

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