The Federal Government has processed $98m and N17.2bn as partial payments for the ongoing rehabilitation of the Port Harcourt Refining Company.
In the same vein, the government had made an initial payment of $194m, the 15 per cent advance payment required for the facility’s rehabilitation, to Tecnimont SpA of Italy.
A report from the Nigerian National Petroleum Company on the financial status update of the rehabilitation said the project was financed by an equity contribution by the sponsor and loan by lenders (AfreximBank).
The report specified that the Engineering, Procurement, Construction, Installation, and Commissioning contract price remained at $1.397bn lump sum with $162m as provisional sum, bringing the total project cost to $1.559bn approved by the Federal Executive Council.
The Federal Executive Council approved the contract for the EPCIC of the Port Harcourt refinery on March 17, 2021, and work on the facility started last year. The council approved the award of the PHRC EPCIC contract to Tecnimont in March, and the contract agreement was signed on April 6, 2021, as the report seen in Abuja on Friday indicated that additional funds had been processed to ensure the continued rehabilitation of the plant.
The report said, “Advance payment of 15 per cent ($194m with 70 per cent in US dollars and 30 per cent in naira) has been paid to Tecnimont as a contractual requirement.
“Tecnimont has provided advance payment guarantee of $300m. Milestone One (10 per cent) payment ($98m and N17.2bn) has been processed for payment. The project has 14 payment milestones with deliverables attached.”
On the rehabilitation status, the report said the overall project cumulative planned progress was 10.7 per cent but noted that actual cumulative progress was 6.3 per cent.
“Contractor is to issue a mitigation plan to address this variance and to ensure that the project is completed within schedule,” the NNPC report said.
The PHRC management identified some challenges in the report. The COVID-19 outbreak with the current Omicron variant had created travel disruptions and supply chain challenges worldwide.
Another challenge was the concerns on the East-West Road and the loss of project person-hours on the road associated with moving to and from the refinery.
The report, however, maintained that the project completion period for the entire rehabilitation work was 44 months from the effective date, which was April 6, 2021.
The contractor was complying with the provisions of the Nigerian Content Development Act, adding that there was the active participation of Nigerian companies as sub-contractors in the project.
It said a Memorandum of Understanding was signed between the contractor and community leaders detailing expectations by the host communities from the contractor.
“There has been zero unrest so far due to the robust community relation engagement between owner/contractor and the host communities,” the report said.
The commencement of the rehabilitation of the Port Harcourt refinery in 2021 received commendations from industry players and observers, going by the work being done at the facility.
Tecnimont had since mobilised to site with its sub-contractors, as 15 per cent advanced payment was made to the contractor after submitting an advance payment guarantee.
The refinery managers said the rehabilitation aimed to restore the plant to a minimum of 90 per cent nameplate capacity utilisation.
The PHRC would supply 11 million litres of Premium Motor Spirit, popularly called petrol, to the domestic market. This means the company is expected to produce about 3.96 billion litres of petrol annually.
