Refineries: NNPC to hand over Warri, Kaduna operations to private firms

The Nigerian National Petroleum Company Limited (NNPC) announced on August 30, 2024, that it is seeking reputable and credible operations and maintenance companies to manage the Warri and Kaduna refineries.

The announcement was made via a statement on NNPC’s official X handle.

The post read:

“EXPRESSION OF INTEREST (EOI) For the Provision of Operations and Maintenance (O&M) Services for NNPC Limited Refineries (Combined Tender):

“Warri Refining and Petrochemical Company (WRPC), and Kaduna Refining and Petrochemical Company (KRPC).

“NNPC Ltd is seeking to engage reputable and credible Operations & Maintenance (O&M) companies to operate and maintain two of its refineries…

“Warri Refining and PetrochemicalCompany (WRPC) and Kaduna Refining and Petrochemical Company (KRPC)…

“To ensure reliability and sustainability to meet the nation’s fuel supply and energy security obligations.

“The O&M tender for WRPC and KRPC will be treated as a single tender through a three (3) stage tender process (EOI, Technical and Commercial)…

“Leveraging on all the possible opportunity cost associated with procurement of consumables, personnel/ manpower management…

Utilization of Computerized Maintenance Management Software (CMMS), Warehousing Management System (WMS) etc.

“The O&M Contract scope of work shall cover, but not be limited to, the following: Long term and short term production/operations planning Production and operations execution.”

History of NNPC

NNPC was established in 1977 through the merger of the Nigerian National Oil Corporation (NNOC) and the Federal Ministry of Mines and Power.

It was created as a state-owned enterprise responsible for managing the country’s vast oil and gas resources.

Over the decades, NNPC has been pivotal in Nigeria’s economy, as oil and gas exports account for major revenue and foreign exchange.

Initially, NNPC operated as a government agency, but it has since evolved into a commercial entity under the Petroleum Industry Act (PIA) of 2021.

This transformation enabled NNPC to operate as a limited liability company, thereby enhancing its efficiency, accountability, and global competitiveness.

The reorganization aims to attract more investments and streamline operations, positioning NNPC as a key player in both domestic and international oil and gas sectors.

NNPC’s responsibilities include exploration, production, refining, transportation, and marketing of petroleum and petroleum products.

It also oversees joint ventures with international oil companies (IOCs) and handles the distribution and pricing of petroleum products within Nigeria.

Background on WRPC and KRPC refineries

WRPC:

WRPC, located in Ekpan, near Warri in Delta State, was commissioned in 1978.

The refinery has a refining capacity of 125,000 barrels per day (bpd) and was initially designed to process both Nigerian and imported crude oil.

Over the years, it has been crucial in Nigeria’s downstream sector, significantly producing gasoline, kerosene, diesel, and LPG.

Consequently, its role has been vital in meeting the country’s energy needs.

WRPC has played a key role in meeting Nigeria’s domestic fuel needs and reducing the country’s reliance on imported petroleum products.

However, like other Nigerian refineries, it faces challenges such as aging infrastructure, underutilization, and frequent shutdowns, reducing output and efficiency.

KRPC:

KRPC is located in Kaduna, in the northern part of Nigeria, and was commissioned in 1980.

It was designed with a capacity of 110,000 barrels per day (bpd) and was intended to serve the northern region of Nigeria.

The refinery was built to process both Nigerian crude and imported heavy crude oil from Venezuela and Kuwait, making it versatile in its operations.

KRPC is crucial for supplying fuel to northern Nigeria, aiding in the availability of refined petroleum products nationwide.

Like WRPC, KRPC has also faced operational issues, including poor maintenance, affecting its capacity to function fully.

The three-stage tender process

The tender process for O&M services of WRPC and KRPC includes three stages: Expression of Interest (EOI), Technical, and Commercial.

This multi-stage approach is designed to ensure transparency, competitiveness, and the selection of the most qualified firms for the job.

Expression of Interest (EOI):

– The EOI  stage (the initial stage) invites companies to express interest; thus, marking the initial phase of NNPC’s tender process.

At this stage, firms must demonstrate their credentials and experience; thus, proving their ability to meet the basic requirements.

– The EOI filters serious and capable bidders who meet the minimum technical and financial criteria.

Technical stage:

– In the Technical stage, prequalified companies from the EOI phase must submit detailed technical proposals.

These proposals should outline their approach to managing the refineries, including maintenance strategies and production planning.

Additionally, they should detail using advanced technologies like Computerized Maintenance Management Software and adherence to safety and environmental standards.

– This stage thoroughly evaluates bidders’ technical competence, ensuring they have the expertise and resources to operate the refineries.

Commercial stage:

– The Commercial stage is the final phase of the tender process, where shortlisted companies present their financial proposals.

This includes the cost structures for their services, pricing models, and other commercial terms.

The goal is to select a company that offers the best value for money while ensuring sustainable operations.

– This stage involves finalizing contract terms, ensuring the selected firm aligns with NNPC’s objectives and Nigeria’s energy goals.

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