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NNPC: New Refinery Will Cost About $12 Billion

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NNPC: New Refinery Will Cost About $12 Billion
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•Kyari defends decision to rehabilitate Port Harcourt facility

By Emmanuel Addeh

The Nigerian National Petroleum Corporation (NNPC) yesterday vigorously defended the approval of a whopping $1.5 billion for the rehabilitation of the Port Harcourt refinery, maintaining that apart from following due process, building a new refinery in the class of the one in Rivers will cost the federal government between $7 billion and $12 billion.

Group Managing Director of the corporation, Mallam Mele Kyari, who spoke in Abuja, stated that the decision to revamp the old facility was further taken because constructing a new refinery will take a period of four years, during which Nigeria must continue to import products.

The NNPC helmsman argued that there was no basis for comparison between the Port Harcourt refinery and the one sold by Shell in America for $1.2 billion in terms of capacity, describing the public comments emanating thereof as curious.

He disclosed that the actual cost of the project is about $1.34 billion, noting that the additional expenses include taxes and other duties that could come up.

“The real cost is $1.34 billion. Even then you could argue and say why you wouldn’t build a new refinery. We have also seen some curious comparisons that shell sold one of its refineries for $1.2 billion and that it’s even better than our own.

“This is mundane. Even a Google search will reveal that it was built in 1915 and it’s a 107,000 barrels per day refinery. It has been on shut down by the regulators since early last year. Not only that, when you buy a refinery you buy its assets and the liabilities,” he argued.

He maintained that many people do not know the financial transactions that go into some negotiations, saying that it is needless to compare a combined refinery of 210, 000 barrels to a much smaller and much older refinery which has many issues with regulators.

“Simple due diligence was not conducted before those comments were made. They have asked why we don’t just build a new one. What does it take to build a refinery of this status today? It’s anywhere between $7 billion to $12 billion to construct a refinery of this nature. This is what we call battery limit construction. That’s the estimate you see in the public space.

“There are things you do outside the battery limits like the tank and other utilities that are never accounted for when the estimates of this nature are done. That’s about 25 per cent of the total cost. So, when you say refineries can be built for $6 billion or even $10 billion, you should also think about the 25 per cent you will add to it,” Kyari said.

He said that another option would have been to scrap the current one and build a new one, but added that the resources are not available while the banking sector is not ready to put in the money because they no longer fund oil projects of that magnitude.

Kyari said that the refineries are national assets that must be used to ensure energy security for the country, maintaining that if a new refinery is started, it cannot become functional in less than four years, which means Nigeria will keep importing in the next four years.

According to him, even for national strategic purposes, that would be a wrong decision, with the last turn-around-maintenance of the Port Harcourt having been done 21 years ago.

The GMD stated that the current huge cost of rehabilitation was because the last turn-around-maintenance was badly carried out.

He posited that all stakeholders and agencies of the government were involved in the process leading to the award, saying that it wasn’t a TAM that was currently being carried out but total rehabilitation, which means that major components will be replaced, new items will be introduced and an upgrade of the plant.

Kyari argued that the process went through the Bureau of Public Procurement and other such bodies, saying that he was confident that the best decision was taken after the tender process.

He stressed that the process was delayed for the past 10 years because of unwarranted interferences and strategy problems, including going to the original refinery builders, which he said was the wrong thing to do.

Kyari said that the borrowing angle was introduced because typically, lenders will give conditions, one of which is an Operations and Maintenance contract arrangement, meaning that NNPC will not operate the plant, as it will be done in consonance with what he described as the best global practice.

“More than that, the contractors will give a guarantee that it will work for such a period of time. That’s part of the requirements which was absent in previous ones under the TAM arrangements,” he said.

He vowed that the plant will work and the loans will be repaid, saying that he was confident that in the next 15 years, the plant will still be running.

The NNPC helmsman said in 18 months, gas will be obtained from the plant and will eventually, scale up until the contractors leave the site, unlike a new one that will require the whole plant to be completed before it starts functioning.

According to him, the loan will be repaid from when the refinery becomes functional, adding that a refinery can produce a margin of $4-$7 per barrel which will be used to finance the loan.

“What we have done is to put in place a transparent process. This has not always been done. The EPC contract was thrown open. It has never been done. We have invited McKenzie to support us. We have taken the control from the NNPC, including the selection of EPC contractors,” he said.

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Ganduje, others reconcile Dangote, BUA over sugar plant

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Ganduje, others reconcile Dangote, BUA over sugar plant
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Governor Abdullahi Ganduje of Kano state has waded into the dispute between Dangote and BUA companies owned by two business moguls from the state.

This is in order to resolve the lingering conflict among the two Kano State prominent indigenes Aliko Dangote and Abdussamad Isyaka-Rabi’u over the establishment of a Sugar plant by BUA.

A statement by Abba Anwar, the Chief Press Secretary to the governor on Thursday in Kano, said the reconciliation meeting took place on Wednesday in Abuja.

He said that Alhaji Aminu Dantata, Kano Emirate and the Kano State Council of Imams joined the governor in the reconciliation meeting.

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The News Agency of Nigeria (NAN) recalls that recently there were reports that Dangote complained about the establishment of a sugar plant by BUA International Limited in the Port Harcourt free trade zone, saying it was out of tune with export laws.

Anwar said that after the meeting, Chairmen of both Dangote and BUA agreed to work together to supply enough sugar to satisfy the demand of the country.

According to him, the meeting put a stop to all rumours that the duo was in dispute over sugar business control in the country.

“They all dismissed allegations that Dangote was planning to see the increase of sugar price, thereby pressurising BUA to succumb to the increment. They described the allegation as baseless and lacking any iota of truth.

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“The meeting was seen as the zenith of other similar efforts to reconcile the two giants by the governor. Alhaji Aminu Alhassan Dantata played the role of a father during the meeting,” Anwar said.

Present at the meeting were the Minister for Commerce, Trade and Investment, Mr Niyi Adebayo and representative of the Kano Emirate, Alhaji Aminu Dan-Agundi.

Others are Chairman of the Council of Kano Imams, Sheikh Muhammad Nasir-Adam, the Chief Imam of Sheikh Ahmadu Tijjani Friday Mosque, Kofar Mata, Kano and the Chairman of NEPZA, Adamu Panda.

All the two business moguls agreed to work together in unity for the growth and development of the nation.

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(NAN)

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FG To Auction ₦150 Billion Bonds In April

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FG To Auction ₦150 Billion Bonds In April
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The Debt Management Office on Wednesday disclosed that the Federal Government would offer N150bn bonds for subscription in April.
A circular by the DMO on its website showed that the breakdown of bonds comprised of three bonds worth N50bn each.

They are 10-year reopening bond to be offered at the rate of 16.2884 per cent and to mature in March 2027; a 15- year reopening bond to be offered at 12.5 per cent and mature in March 2035; and the third and longest bond which is a 25-yeaer reopening bond to be offered at 9.8 per cent and mature in July 2045.

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According to the DMO, the bonds which would be auctioned on April 21, 2021 have a settlement date of April 23, 2021.

The DMO had earlier disclosed that the Federal Government’s bonds for March worth N150bn which were auctioned were oversubscribed by N183.48bn.

The total subscription received from investors for the bonds was N333.48bn comprising of N65.25bn for 16.2884 per cent FGN March 2027 bonds; N110.19bn for 12.5 per cent FGN March 2035 bonds; and N158.04bn for 9.8 per cent FGN July 2045 bonds.

The auction result added that out of 82, 125 and 215 total bids for the tenures, 48, 88 and 176 were successful.

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It stated that a total of N262.1bn was allotted, comprising of N44.01bn, N86.29bn and N131.80bn respectively.

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Qatar To Invest $5 Billion In Nigeria’s Economy

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Qatar To Invest $5 Billion In Nigeria's Economy
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Nigerian economy to be boosted by $5 billion investment by Qatar

The FG has disclosed that the Middle-East nation of Qatar is set to invest in the Nigerian economy the sum of $5 billion.

The Federal Government has said that the oil-rich state of Qatar plans to invest $5 billion in the Nigerian economy.

According to a statement by the Deputy Director of Information, State House, Mr Abiodun Oladunjoye, this disclosure was made by the Federal Minister of Foreign Affairs, Geoffrey Onyema, while speaking at a farewell dinner in honour of Nigeria’s Ambassador-designate to the state of Qatar, Ambassador Yakubu Ahmed, who is also the outgoing Director of Protocol at State House.

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Onyeama said that there had been discussions with Qatar on partnership with Nigeria’s Sovereign Wealth Fund, for significant investments in the region of $5 billion in the Nigerian economy.

He said, “Qatar is a weighty and strategic country and very strategic in that part of the world and we are putting our best feet forward to advance the interest of our country economically and in other areas.”

The Foreign Affairs Minister had recalled that President Buhari visited the State of Qatar in 2016 and the Emir of Qatar, His Highness Tamim Bin Hammad Al-Thani reciprocated with a State visit in 2019.

What this means

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This is going to be a huge boost to Nigeria’s drive for foreign investment and help significantly in the country’s push for economic development.

Qatar which has a very high Human Development Index (HDI) is regarded as the world’s third-largest natural gas and oil reserves with a population of about 2.8 million people as of 2019.

Investment Champion: Geoffrey Onyema, Minister of Foreign Affairs, Federal Republic of Nigeria

The investment by the wealthy Middle East country will add to Nigeria’s diversification efforts as such investments are expected in the area of oil and gas, manufacturing, power/utilities and so on.

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