Chinese, Libyan Investors Eye Kaduna Refinery
Fuel Imports: NNPC awards Contracts for 45 cargoes
By Mike Oduniyi
The transfer of management of the Kaduna refinery to foreign strategic investors has got underway as the Nigerian National Petroleum Corporation (NNPC) is now negotiating with Chinese and Libyan investors who have shown interest in the plant.
However, with domestic production of petroleum products still at its lowest, the NNPC at the weekend, placed orders for the importation of 45 cargoes of fuel for the fourth quarter (October-December) this year.
THISDAY checks revealed that after oil majors producing crude oil in the country namely Shell, ChevronTexaco and ExxonMobil, declined Federal Government's offer to take up core stakes in the four local refineries, the NNPC was given a mandate to secure investors from outside the country.
Sources said a Memorandum of Understanding (MOU) had already been drawn up establishing a management pact between the NNPC and the Chinese state oil firm, SINOPEC, on NNPC downstream businesses.
"If everything goes according to plan, the MOU is expected to be signed this week," said a source, who added that proposals have equally been received from operators in the UK, Russia, Algeria and Norway for the three other refineries in Port Harcourt and Warri.
Government has in the past two years been attempting to sell 51 percent shares in the four ailing refineries, which are barely meeting 10 percent of the nation's petroleum products demand.
Its desire to have the multinationals take over the plants failed to materialise after the oil majors rejected the offer. Even tenders received late last year from interested companies, were cancelled.
Speaking on the development, NNPC Group Managing Director, Engineer Funsho Kupolokun who although refused to confirm directly which investors the corporation was holding talks with, however, said the country is about to start witnessing the influx of foreign investors into the downstream oil sector.
"The current management of the NNPC knew that following the deregulation of the downstream sector, the corporation will face stiff competition from both local and foreign investors. That is why we launched the transformation project recently," said Kupolokun.
He added that contrary to public fears on the deregulation policy, more jobs will be created in the sector as more investors come in.
Following a court ruling last Tuesday, the NNPC and marketers jerked up fuel prices to meet import parity, with the pump price petrol raised to between N52 and N55 per litre up from N43.90.
The increase has since generated tension in the country, with various civil rights groups calling for mass protest.
Nigeria, Africa's largest crude oil producer, relies heavily on importation to meet domestic fuel demand.
THISDAY checks revealed that the NNPC at the weekend, awarded contracts to eight multinational oil trading companies to import a total of 45 cargoes of fuel for distribution during the fourth quarter of this year.
The contracts, which translates into importation of 1.81 billion litres of fuel, were awarded to multinational trading companies namely Shell, ChevronTexaco, British Petroleum (BP), Addax, Vitol, Trafigura, Glencore, Calson, and Acadia.
The number of cargoes were less by one compared to 46 cargoes ordered for the third quarter. The contracts were awarded at the cost price of $500 per metric tone at premium of plus $49.50 per metric tone, which could take the total cost of the contracts to about $741.8 million (N98.7 billion).
Shell, ChevronTexaco got three cargoes each, US-based Vitol, Calson, and Trafigura, seven cargoes each while, Swiss oil trader, Addax, British Petroleum and Glencore, all of which got four cargoes each.
The awards for the first time in recent years, left out Nigerian local oil traders. Indications that Nigerian companies would not benefit from the contracts had emerged earlier when the NNPC demanded that bidders must have an annual turnover of $5 billion.
"The latest awards are to companies that will deliver no matter the cost," said an official of the Pipelines and Products Marketing Company (PPMC).
Local oil traders under the umbrella of the Crude Oil and Petroleum Traders Association of Nigeria (COPTAN), had decried the NNPC guidelines for the fuel import contracts. The group said while they appreciated the corporation's intention to weed out middle-men and agents in the import business, it however, argued that the guidelines worked against genuine Nigerian oil trading firms.
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