35 days to deadline: Stakeholders doubt December handover date of Port Harcourt Refinery

Barely 35 days before the end of December, there is a cloud of uncertainty as to whether the promise by the federal government to bring the Port Harcourt Refinery on stream before the end of the year will still be a reality, Daily Trust Saturday reports. On August 25, the Minister of State for Petroleum […]

Barely 35 days before the end of December, there is a cloud of uncertainty as to whether the promise by the federal government to bring the Port Harcourt Refinery on stream before the end of the year will still be a reality, Daily Trust Saturday reports.

On August 25, the Minister of State for Petroleum (Oil) Heineken Lokpobiri, has said that the Port Harcourt Refinery (PHRC) will be ready for operation by December 2023.

This was contained in a release signed by Garba Deen Muhammad, the Chief Corporate Communications Officer at the Nigerian National Petroleum Company (NNPC) Limited.

The minister gave the assurance during an inspection tour of the project site in Port Harcourt. But stakeholders have expressed doubts about the feasibility of the December date from the reality on ground.

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The Alesa Eleme location of the multibillion naira federal government- owned Port Harcourt Refinery Company (PHRC) is a beehive of activities.

The entrance gate leading to Area Five, where the first phase of rehabilitation work of the refinery is taking place, has witnessed heavy human traffic, comprising mainly of both skilled and unskilled workers of various contracting firms working day and night to ensure that the December deadline given by the federal to hand over the first phase of the rehabilitation work is achieved.

By 12noon on November 22, 2023 when our correspondent visited the obsolete-looking refinery complex, many of the staff engaged by the contractors were filing out of the gate for lunch break.

The atmosphere and surroundings of the multibillion investment were fully charged, with various categories of staff moving from one place to another taking orders from their supervisors on what to do. But the reality on ground did not shown any sign that the project would be handed over in December.

Dr Joseph Obele, the executive chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN), whose association was accorded the privilege of oversight function of monitoring the progress of work at the ongoing rehabilitation work, expressed doubt that the December completion date would be feasible.

Obele told our correspondent that it was on record that the federal government borrowed $1.5billion from AFRIEX Bank for the repair of the refinery.

He said the former Minister of State for Petroleum, Timipre Sylva, informed them that the refinery would commence operation in the second quarter of this year, but that promise failed. He added that another date of first quarter of this year also failed.

The IPMAN chairman said that despite failed efforts by the immediate past minister of state for petroleum to deliver the project at a record time, more efforts had been intensified for a speedy completion of the project.

He said the project had attained 90 per cent completion but expressed doubt that the December deadline completion time would be feasible.

He said, “During a meeting with the Nigeria Labour Congress (NLC), Mr President announced to us that operation of the refinery, plus or minus, would commence on December 2023. And as the IPMAN chairman in  Rivers State and an indigene of the host community of Alesa Eleme, where we have the refinery, arising from my office as part of my oversight function, I usually visit the site.

“I can tell you on good authority that work is going on seriously at the first phase of the refinery, which is Area Five. From my observation they are done with mechanical and civil engineering jobs; the part of the jobs they are doing now is the electrical, which has to do with   instrumentations and installations.

“From more privileged information at my disposal, a commissioning committee has been constituted, but it is obvious that the refinery will be coming up next month, December or early January.  No man can tell you authoritatively that the plant will be coming up in December. If they say December, it may be early January 2024. It is quite obvious that the progress of job is encouraging; and it is enormous.

 

“Since Mr President gave that marching order of December, the contractors are up to their game; they have redoubled their efforts at work in the site.  So, as an association, our interest is to see the refinery commence in no distant time because the landing cost of fuel is becoming unbearable to the federal government and importation is witnessing some hiccups at the moment because we have a supply gap.

“The quantities demanded by marketers are not actually equal to the supply given to us by the Nigerian National Petroleum Company (NNPC) Limited.  That’s why we have supply shortage nationwide. The price of fuel is not what it ought to be.  Some Nigerians are buying at N700 from some locations, some are buying at N800 from other locations, while some are buying at N900 per litre.”

He pointed out that the delay in the commencement of work at the refinery was bringing untold hardship to Nigerians, noting that Nigerians want to see the plants commence operation in no distant time.

“I can tell you that the progress of work at the refinery is at 90 per cent completion level,” he added.

A staff of Montego, one of the contracting firms handling the rehabilitation work, expressed doubt that the project would be delivered by December 2023.

Speaking with our correspondent under the condition of anonymity he said,   “I don’t think the first phase of the rehabilitation work would be delivered by December because of the total rehabilitation work being carried out at Area Five, which is the first and oldest refinery.  From my observation, that project will not be ready by December. The one they are working on right now, which is supposed to be ready by December, is the one they call Area Five. If they are serious it can be ready, but that particular refinery has been a problem.

“For about 30 years, that refinery has been down. It has gone through several rehabilitations but nothing serious has really come out of it.

“That particular refinery is out of modernity because the present technology is not there. It has a kind of manual facilities and does not have modern instrumentations. It does not have a control room and all those technological instrumentations. All the modern technological instrumentations should be installed for the facilities to be ready. All the instrumentations are designed abroad and the contractor only comes here to implement and install them.”

He said the contractors were battling to replace the manual facilities with modern technological instrumentations, adding that with the reality on ground, the project would not be ready by December.

Another staff of the company who also pleaded anonymity said the contractors were carrying out refurbishment of the 21 installation tanks at the Area Five of the refinery.

“There are about 21 tanks that are being refurbished right now. Out of the 21 tanks, 10 have been worked on and the remaining ones are undergoing refurbishment. We have also finished all the civil engineering work, such as casting of bases,” he said.

Road leading to refinery still in deplorable state

Apart from the doubts being expressed by stakeholders, our correspondent also observed that the road leading to the refinery from the East West Road is in total dilapidation, further indicating the uncertainty of the refinery being ready for commissioning in December.

It would be recalled that trucks laden with petroleum products fall on the road on a daily basis while several lives have been lost on the road.

The stretch of road leading to the refinery from Alesa Junction down to the entrance gate enroute Area 5 has collapsed.

Facts about old and new refinery

Daily Trust Saturday reports that the Area 5 (old refinery) has the capacity to refine 60,000 barrels per day.

The old refinery (area 5) comprises a CDU, a CRU, and a liquefied petroleum gas (LPG) facility.

The refinery complex uses four turbo-generators of 14MW an hour of electricity generation capacity each and four boilers of 120 tonnes (t) an hour of steam generation capacity each.

The refinery products include petrol, diesel, LPG, aviation and domestic kerosene, low pour fuel oil (LPFO), and heavy pour fuel oil (HPFO).

On the other hand, the new plant (refinery) has the capacity to produce 150,000 barrels per day bringing the total capacity of 210, 000 per day when combined with the old refinery.

The new Port Harcourt refinery comprises a crude distillation unit (CDU), a vacuum distillation unit (VDU), a naphtha hydrotreating unit (NHTU), a catalytic reforming unit (CRU), a continuous catalyst regeneration (CCR) unit, a kerosene hydrotreating unit, a fluid catalytic cracking (FCC) unit, and a dimersol unit to convert propylene into a gasoline blendstock.

It also houses a butamer isomerisation unit, an alkylation unit, apart from hydrogen purification, fuel gas vaporiser, sour water and caustic treatment units.

Lokpobiri vows to hold NNPC accountable over project completion

The Minister of State for Petroleum, Senator Heineken Lokpobiri, said he was holding the NNPC accountable for the completion of the rehabilitation work at the refinery.

Lokpobiri, who spoke to journalists shortly after inspecting a private modular refinery at Ibigwe in Imo State, said he would be going back to the refinery in the next couple of days to see things for himself.

He said the NNPC team  told him  that the refinery would be ready by December, adding, “When  I went there, I saw that they were working; and they are still working. I will be there in the next few days.

“There are three phases in the Port Harcourt refinery.  The phase one; and from the presentation made to me, they said the first phase would be ready by December. So let us wait till December. When the fuel starts coming out, everybody will see it.

“I want to make it very clear that I am not the one rehabilitating the refinery, the NNPC, which is our national oil company, is the body responsible for that, even before I came into office.  I am pushing them because of the importance of refineries in the country, to ensure that they meet the target.

“Let’s have the first phase working, then the second and third phases will work at the end of next year. That is what they are doing, and I am holding them accountable. I am holding them responsible because they said so. I am not the one responsible, I can only tell you that they are working.”

The Port Harcourt refinery, which is a subsidiary of the NNPCL, is composed of two refineries with the capacity of refining 210,000 barrels of crude oil per day.

32 months after…

The EPC contract for the rehabilitation work at the refinery complex was awarded by the President Muhammad Buhari-led government in March 2021 to Italy’s Tecnimont S.p.A, a subsidiary of Maire Tecnimont Group, at the contract sum of $1.5billion.

According to the contract documents, the project entails engineering, procurement and construction activities for a full rehabilitation of the Port Harcourt refinery complex, aimed at restoring the complex to a minimum of 90 per cent of its nameplate capacity, to be delivered in phases from 24 and 32 months and the final stage expected to be completed in 44 months from the award date.

However, a former Minister of State for Petroleum Resources, Chief Timipre Sylva, had assured Nigerians that the refinery would commence operation in 18 months from the award date.

While 32 months have elapsed since the contract was awarded in March 2021, the government has kept shifting the completion date since the last quarter of 2022. It has again postponed the refinery’s operation to December 2023, even when there has been no assurance from Tecnimont that the project would be ready for use by that time.

Sylva had on many occasions explained that funds for the rehabilitation would come from three sources; namely, NNPC’s internally generated revenue – $200million; federal appropriation -$800m and the African Export-Import Bank (Afreximbank) – $500m.

While the repayment of the loan from Afrexim Bank, according to the government, would be from operations of the refinery, the Youths and Environmental Advocacy Centre (YEAC-Nigeria), does not believe that the Port Harcourt Refinery cannot be delivered by December 2023.

The executive director of YEAC Nigeria, Mr Fyneface Dumnamene Fyneface, wondered how petrol tankers would access the refinery to load products when the Eleme axis of the East-West road is impassable.

“Most statements from government officials that cannot be independently verified cannot be trusted when it comes to issues of refineries. At the point of flag-off by former President Buhari in May, it was promised that the Dangote Refinery was going to commence production in July 2023, and up till today, there is no hope in sight.

“Even if the refinery would commence production in December, where is the road that tankers can use to load products and distribute to consumers? The Election junction to the refinery section of the East West road is in its worst state.

“I believe the refinery would commence operation someday, but not in December 2023, even if it cannot refine up to its capacity because of the outdated equipment and facility.

“While it is possible to project into the future for a possible completion date, Advocacy Centre believes it is better to allow the contractors work at their pace to deliver a refurbished refinery that would stand the test of time to produce, reduce importation and possibly crash the price of fuel, with a view to reducing the challenges faced by the masses since subsidy removal.”

Fyneface lamented that the country’s four refineries may not contribute significantly to solving Nigeria’s  energy crisis even after the rehabilitation, regretting  that more money has been spent on the maintenance of the refineries over the years than the cost of building a new modern refinery.

“I do not believe that production would commence at the Port Harcourt Refinery in December 2023. If it miraculously happens, it would be an experimental production that cannot be depended upon to contribute to addressing the issues of energy crisis in Nigeria.

“I expect production at the refinery to possibly kick off effectively anytime in 2024 but do not also think that it can refine to its full installed capacity due old age and obsolete technology it parades.

“Nigerians should rather be worried about the so much crude oil dollars and taxpayers money being expended on the country’s refineries, yet they have failed to come on stream.

Fyneface, who is the national facilitator of Project with Artisanal Crude Oil Refiners for Modular Refineries, said for the energy sufficiency and export, the country’s four refineries must be functioning at optimal capacity, while new refineries must be established in all oil-producing states, as well as modular refineries.

“Government should also support modular refineries with environmental-friendly policies to operate at their maximum capacities, grant licences to others who intend to establish private refineries and also ensure that feed (crude oil) is guaranteed for them.

“We have also finished all the civil engineering work, such as casting of bases,” he said.