New Refinery to Cost $12bn, Says NNPC GMD
The Nigerian National Petroleum Corporation (NNPC) Monday said that it will cost Nigeria between $7 billion and $12 billion to build a brand new refinery, explaining that this was the reason to rehabilitate the Port Harcourt refinery.
The Group Managing Director of the corporation, Mallam Mele Kyari, who disclosed this Iin Abuja said besides, such new refinery will take not less than four years to complete, adding that this means also importing fuel during this perod.
Kyari argued that there was no basis to compare the Port Harcourt refinery and the one sold for $1.2 billion in Amaerica by Shell in areas of capacity.
He explained, “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.
“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.”
The Group Managing Director of the corporation, Mallam Mele Kyari, who disclosed this Iin Abuja said besides, such new refinery will take not less than four years to complete, adding that this means also importing fuel during this perod.
Kyari argued that there was no basis to compare the Port Harcourt refinery and the one sold for $1.2 billion in Amaerica by Shell in areas of capacity.
He explained, “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.
“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.”
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