Nigeria: NNPC, Partners to Build Four Greenfield Refineries Bassey Udo 10 March 2009
Nigerian National Petroleum Corporation (NNPC) and some local and foreign investors are partnering in the promotion of the development and construction of three Greenfield refineries in various locations in the southern part of the country.
The Spanish consortium has already demonstrated its seriousness to go ahead with the project by paying the mandatory $1billion non-refundable deposit to the state government, an amount that could be forfeited if after three months real moves are not seen in the direction of actualizing the construction process.
Greenfield refineries are brand new refineries built from the scratch in a new location. This revelation is coming just as the Group Managing Director of the corporation, Mohammed Barkindo, pledged his commitment to ensure that all existing operational facilities in the downstream sector of the nation's petroleum industry are rehabilitated and made functional to facilitate the emergence of an environment that would promote effective deregulation of the industry.
Daily Independent gathered at the weekend that each of the refineries is designed with the capacity to handle the refining of an average of 250,000 and 300,000 barrels of crude oil per day (bpd).
A top official of the NNPC who disclosed said the construction, ownership and management of the new refineries will be by strategic foreign and local investors as well as the host communities in partnership with the NNPC, though he said not more than two foreign investors would be allowed to participate in the project.
Though due diligence on potential investors are currently ongoing to determine the technical and financial capacity of the prospective investors, indications are that the refineries would be run as a joint venture private liability companies between the NNPC, some interested state governments as well as private local and foreign investors as well as communities in the areas the facility are to be sited.
A breakdown of the ownership structure indicates that while the NNPC is expected to own not more than 40 percent equity stake in the projects, the foreign technical investors would maintain between 30 and 35 percent interest, with local investors taking 15 to 20 percent stake-holding and the balance goes to the communities. Besides, it was gathered that negotiations are ongoing on the details of the terms of partnership between the NNPC and its partners, with a memorandum of understanding (MOU) to be entered into by partners after the final approval has been received from investors between March and April.
With 2012 and 2013 set as a target for the completion of the facilities, it was gathered that in line with government's reform agenda, operations at the refineries would be conducted strictly along business lines in accordance with internationally accepted best practices that would enable partners recoup economic value from their investment.
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