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Energy

FG discloses how it hopes to fund the $1.5 billion rehabilitation of Port Harcourt refinery

The FG has disclosed how it intends to raise the $1.5 billion for the rehabilitation of the Port Harcourt refinery.

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Analysis: NNPC and its refining losses 
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The Federal Government has revealed how it hopes to raise the $1.5 billion for the rehabilitation of the Port Harcourt refinery in Rivers State.

This is as the government has said that the rehabilitation of the Port Harcourt refinery will not significantly add to the country’s debt burden.

This was disclosed by the Minister of State for Petroleum Resources, Timipre Sylva, during an interview with Channels Television.

READ: Shell’s OML 11: FG ordered to renew licence for 20 years

He said about $800 million of the funds would be coming from appropriation, $200 million from the internal operations of NNPC, and the rest from the African Export-Import Bank (Afreximbank).

While dousing concerns that the project would worsen the nation’s debt profile, Sylva stated that the government had no intention of borrowing all the funds needed for the rehabilitation of the refinery, which he said would be functional in 18 months.

What the Minister of State for Petroleum Resources is saying

Sylva disclosed that a subsidiary of the Nigerian National Petroleum Corporation (NNPC), Nigerian Petroleum Development Company Ltd (NPDC), and others would contribute the money to be used for the project.

He said, “There are questions asked, when are we going to fix our refineries, when are we going to rehabilitate our refineries? Now, we are rehabilitating the refineries but unfortunately, it is generating all these (issues).”

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Sylva revealed that the federal appropriation would contribute $800 million to the project.

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READ: FG flags off $3 billion rail project that will connect about 14 Southern, Northern states

Going further, he said, Let me tell you how this rehabilitation is going to be funded; it is not going to be all debts, we are not going to borrow all the monies that are going into the rehabilitation (project).

“Some of the money will come from NNPC’s internally generated revenue, from NPDC, some of it will come from the Federal appropriation, and just a little fraction will come from the African Export-Import Bank (Afreximbank).”

“The NNPC is going to spend about $200 million from its internally generating revenue sources, while the Federal appropriation will put in about $800 million and it is already broken down into three parts.

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READ: These two Nigerian refineries recorded zero percent utilisation in March

“The 2020 appropriation will give $350 million, 2021 appropriation will give another $350 million, and 2022 appropriation will give another $100 million, making it all $800 million from appropriation, and then the rest of it will now come from Afreximbank,the Minister said.

On the repayment of the loan, Sylva explained that going by the way the project was structured, the debt would be paid back from the operations of the refinery.

He insisted that the rehabilitation of the refinery would not really be a debt that would add to the general debt burden of the country,  adding that a commercial discussion was ongoing between the NNPC and Afreximbank on how the money would be paid from the operations of the refinery.

In case you missed it

  • The Federal Executive Council a few days ago approved the sum of $1.5 billion for the immediate rehabilitation of the 210,000 barrels per day Port Harcourt refinery.
  • This has drawn a lot of criticism from Nigerians who expressed doubts in the government’s transparency towards the project. They also expressed their disapproval of the Federal Government’s decision to spend such a huge sum of money on an asset that they plan to sell.

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Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Business News

NNPC, SEEPCO sign gas development agreement for domestic market

The execution of the deal is to help reduce gas flaring in the country and a show of NNPC’s commitment to facilitating the country’s transformation into a gas-powered economy.

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The Nigerian National Petroleum Corporation (NNPC) and an indigenous oil exploration and production firm, Sterling Exploration and Energy Production Company (SEEPCO), both partners in the Oil Mining Lease (OML) 143, have signed a Gas Development Agreement (GDA).

The execution of the deal is to help reduce gas flaring in the country and a show of NNPC’s commitment to facilitating the country’s transformation into a gas-powered economy.

According to a tweet post from NNPC on their official Twitter handle, the agreement between both parties was signed at NNPC’s head office, NNPC towers, on Thursday, April 22, 2021.

The statement says that this latest milestone provides the terms for the development of OML 143 Gas, providing gas for the domestic market which aligns perfectly with the Federal Government’s National Gas Expansion Programme (NGEP).

What this means

The execution of this project will not only help to support the Federal Government’s effort in reducing gas flaring by monetizing it but will also play its part in the government’s effort in the expansion of gas utilization in the country as a cleaner, cheaper and more reliable alternative form of energy.

This is coming at a time when the Federal Government is shifting focus to gas utilization as an alternative source of energy especially with the increase in the retail pump price of petrol. This is one of the various initiatives by the government as represented by the NNPC towards providing alternative sources of energy.

 

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Business

NNPC says NO to petrol pump price hike in May

There would be no increase in the ex-depot price of Premium Motor Spirit in the month of May 2021.

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Crude oil market remains unpredictable- NNPC Boss
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The Nigerian National Petroleum Corporation (NNPC) has assured Nigerians that there would be no increase in the ex-depot price of Premium Motor Spirit, popularly known as Petrol in May.

This was disclosed by the Group Managing Director of NNPC, Mele Kyari, on Monday via the Corporation’s Twitter handle.

It tweeted, “There would be no increase in the ex-depot price of Premium Motor Spirit in the month of May 2021.”

Ex-depot price is the cost of petrol at depots, from where filling stations purchase the commodity before dispensing to final consumers.

READ: Nigerian automaker raises $9 million despite protest against electric car in Nigeria

Kyari also added that Petroleum Tanker Drivers had suspended their proposed strike after the intervention of NNPC in the impasse between the PTD and the National Association of Road Transport Owners.

“We have given our commitment to both NARTO and PTD that we will resolve the underlining issue between them and come back to the table within a week so that we’ll have a total closure of the dispute,” he added.

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READ: Oil marketers give conditions to resume fuel importation

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What you should know

  • NNPC has maintained an ex-depot price of N148/litre since February despite the hike in the actual cost of the commodity, hence incurring subsidy of over N120bn monthly.
  • Also in March, the NNPC said it would maintain its ex-depot price for petrol until the conclusion of ongoing engagement with the organised labour and other stakeholders.

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