The Nigerian National Petroleum Company Limited (NNPCL) has signed a $741 million maintenance service contract with Daewoo Engineering and Construction Company Limited for a quick fix repair of the moribund Kaduna Refinery and Petrochemical Company (KRPC).
A statement by the Nigerian oil company indicated that the signing ceremony was performed on Thursday by the top officials of the parties to the deal at the NNPC Towers in Abuja.
The NNPCL management stated that, based on the terms of the agreement, the South Korean company would restore production at the 110,000 barrels-a-day (bpd) facility to at least 60% of its capacity by the end of 2024.
According to the management, NNPC is expected to 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 latest pact between the Nigerian-owned oil company and the South Korean leading engineering firm is part of efforts by the Federal Government to reduce Nigeria’s fuel importation, which over the years has remained one of the biggest challenges undermining Nigeria’s fiscal efficiency, especially on foreign exchange accruals to the nation’s foreign reserves.
Currently the NNPCL is the sole importer of Nigeria’s refined fuel and does this through crude-for-fuel swaps with local and international traders, with the resultant pressure on the country’s foreign exchange.
The NNPCL-Daewoo deal came a few weeks after the Federal Government shifted the commencement of the 60,000 barrels per day Port Harcourt Refinery’s operations from December 2022 to the first quarter of this year.
It would be recalled that in October last year, the NNPCL and Daewoo signed a Memorandum of Understanding (MOU) to rehabilitate the 110, barrels per day Kaduna Refinery. Daewoo Group is also involved in ongoing rehabilitation works at the Warri Refinery which is expected to start working by 2023.
The Federal Executive Council (FEC) had in August 2021, approved the sum of $1.4 billion for the rehabilitation of Warri and Kaduna refineries.