Let’s break down with the GCEO is saying here and I’ll talk about a few things he hasn’t quite taken into consideration.
1. Project Financing: Yes the Refinery needs financing, and like he said financing requires profit. So, before financing a comprehensive cash flow plan has to be drafted to show how the Plant will turn a profit. This can be done accurately to the “T” using Cost Engineering tools.
2. EPC Technical Partners: I don’t know the details of the EPC Contractors who were engaged, but they had worked thus far to deliver the first phase. If there are competency issues, then Project Management contractors can look at the metrics to ensure payments are milestone based and the EPC Contractor does not get paid beyond what they’ve delivered. To say there are no world class EPC contractors available or able to do this work, is not correct. There are many, even locally available. If in doubt, contact the NSChE for assistance or call a meeting with retired engineers who built these plants to provide technical direction.
3. O&M: Operations and Maintenance is literally my bread and butter. You actually can establish key metrics or KPI for what needs to be delivered post overhauling, these KPIs will guide who is engaged and what their output should be. This includes the profitable operation of the Plant, including sales. They will have to sell, recover cost and deliver profit to shareholders, which will include themselves, as their income cannot be based on just whatever output they declare. Their earnings have to be tied to performance. If they fail to perform, they get nothing. If they perform, they get the reward.
O&M is very tough and highly technical, thus proper vetting has to be done on the technical capacity of the contractor, their past work and what they intend to do to ensure they properly run the plant to profitability. All these will be done at the presentation stage.
All of these don’t have to cost anything to both NNPCL and the Nigerian state. It can all be privately driven to ensure standards are adhered to and the result is achieved. There are technical partners who can deliver this, both local and foreign. NETCO, Raziela Engineering, and some others come to mind at this time.
I wish the GCEO success, I just hope he isn’t isolating himself and only looking narrowly at the data in front of him. If he doesn’t have the technical skills to properly dissect the technical issues, he can reach out to people who can help him distill the information to what will make sense to him, financially.
'Thank God for Dangote': Ojulari Says NNPC Not Under Pressure To Run At Loss
When we came on board, the first thing we realised about the refinery was that we were running at a monumental loss to Nigeria; we were just wasting money. My first step was to stop the rot and recalibrate. NNPC is a shareholder in Dangote Refinery and is working on collaborations to maximise the value delivered to Nigerians. The reason our refineries haven't worked is that we've been focusing on two out of the three essentials for sustainability: financing and a competent EPC contractor, leaving out a world-class operational facility to run the refineries.
Bayo Ojulari, Group CEO, NNPC Limited