The Nigerian National Petroleum Company Limited has struck a $741 million deal with Daewoo Engineering and Construction Company to rehabilitate an oil refinery in Kaduna State.
According to Bloomberg, NNPCL signed the maintenance service contract with the South Korean engineering firm at a ceremony held on Thursday.
In a statement issued by the company, it read, “Under the terms of the agreement, Daewoo will restore production at the inoperative 110,000 barrels-a-day facility to at least 60 per cent of its capacity by the end of 2024.
“The deal is part of the NNPCL’s efforts to reduce Nigeria’s near total reliance on imported fuel — long a source of embarrassment for the government of Africa’s largest crude producer.
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“The company has also acquired a 20 per cent stake in a vast 650,000 barrel-a-day complex being built outside Lagos by Africa’s richest person, Aliko Dangote, which after repeated delays may enter production later this year.
“The NNPCL currently imports the entirety of Nigeria’s gasoline requirements — mainly via crude-for-fuel swaps with local and international traders — which it then sells at a steep loss to retailers and wholesalers,” it added.
The government has said that it will remove the costly subsidy in June, even though a new administration will be in the office by then following elections scheduled for later this month.
“The NNPC will finance Daewoo’s “quick-fix” turnaround work at the Kaduna plant — which was commissioned in 1980 — through a mix of its own revenue and third-party financing,” the company said, without identifying any lenders.
The company is already paying Italy’s Maire Tecnimont SpA to rehabilitate two state-owned refineries in the oil hub of Port Harcourt that have a combined capacity of 210,000 barrels a day, mainly funding the project with a $1 billion loan from the Cairo-headquartered African Export–Import Bank.
“Once those facilities and another NNPC plant in the southern city of Warri resume production, the company will hire reputable outside contractors to run them,” it said in the statement.