Nigeria halts Eni’s disputed Port Harcourt refinery deal
Monday, 26 June 2017 06:20
The Nigerian senate passed a motion on 30 May 2017 to halt a concession agreement with the regional unit of Italian firm Eni to repair, operate and maintain (ROM) Nigeria’s Port Harcourt refinery, on the ground of the deal’s lack of transparency
The rumour about Eni’s winning the ROM contract had been triggered since January, when a memorandum of understanding (MoU) was signed between Eni and state-owned Nigerian National Petroleum Corp. (NNPC) to assist in the rehabilitation and enhancement of Port Harcourt refinery.
The reports emerged that Eni’s local subsidiary Agip and the local Oando Petroleum had been selected for the deal without competition.
Commenting on the motion passed in the senate, Adewale Tinubo, CEO of Oando, said, “No mandate for the concession, sale, equity transfer or privatisation of the Port Harcourt refinery … has been signed with Oando.”
Nigeria, an OPEC oil producer, has been seeking investment to finance and implement the rehabilitation of the three dilapidated and under performing state-owned refineries, aiming to reduce dependence on imported oil products.
Ibe Kachikwu, minister of state for petroleum resources, said that the ROM contracts for the state-owned refineries are aimed to reach refining capacities of 445,000 bpd within the next 12-18 months, eliminating the need for fuel imports by 2019.
Kachikwu clarified that a technical committee is assessing the qualifications of the bidders for financing the plants’ rehabilitation. He further added that the final names of the winning companies would be announced after the approval from the cabinet and the parliament.
According to the government, the estimated cost for the project is approximately US$1.1-1.2bn, excluding the restore-work of the pipelines supplying crude feedstock to the facilities.
Nigeria has presently gained a momentum in oil production as the local conglomerate Dangote Industries is constructing an oil refinery near Lagos. The project is scheduled to be completed in 2019, aiming to have refining capacity of 650,000 bpd. The project is expected to meet the demand for oil products for the domestic purpose, and reduce the reliance on imported oil products that consume a large part of Nigeria’s foreign currency reserves.