The Nigerian National Petroleum Company Limited has set stringent financial requirements for companies vying to operate and maintain the Warri Refining and Petrochemical Company and Kaduna Refining and Petrochemical Company.
In the Expression of Interest document released by NNPC on Saturday, only firms with a minimum average annual turnover of $2bn will qualify for the bidding process, as the national oil company stressed that the bidders must be debt-free.
NNPC said the successful bidders must possess the technical expertise and financial strength to effectively manage the refineries and secure a steady supply of petroleum products to meet national energy security needs.
The EOI document highlights the eligibility criteria that interested firms must meet, with the $2bn minimum turnover being a key criterion. This, it said, demonstrates NNPC’s commitment to attracting financially capable and technically proficient companies.
“NNPC is determined to engage reputable and credible Operations & Maintenance companies to operate and maintain the Warri and Kaduna refineries,” the document stated. “These companies must have the financial wherewithal to manage these complex facilities, ensuring their reliability and sustainability to meet the nation’s fuel supply and energy security obligations.”
In addition to the turnover requirement, bidders must demonstrate strong financial health by providing audited accounts for the past four years (2020, 2021, 2022, and 2023). They must also present their latest credit ratings to ensure they have a solid financial foundation for handling the significant operational demands of the refineries.
Beyond financial capacity, NNPC is emphasising technical expertise. The EOI document requires bidders to provide detailed information on their experience with refinery operations and maintenance, particularly in areas such as Fluid Catalytic Cracking units, instrumentation and controls, and turnaround maintenance.
“NNPC’s priority is to ensure that the refineries are operated by firms with proven technical competence.”
The successful bidders must have a track record of managing similar facilities, with experience spanning at least two decades in refinery operations and maintenance,” it added.
The scope of work for the O&M contract is extensive, covering long-term and short-term production planning, maintenance execution, process and controls engineering, and environmental management. Bidders are also expected to provide a detailed account of their management team’s capabilities and the size of their workforce, particularly in relation to refining and other energy and process industries.
NNPC is committed to aligning refinery operations with Nigeria’s local content laws. The EOI specifies that bidders must have a robust organisational structure with a significant percentage of their management and workforce being Nigerian nationals.
“Compliance with the Nigerian Content Act is non-negotiable. Bidders must demonstrate a clear commitment to local content, including the training and development of the Nigerian workforce and engagement with local communities,” it added.
Bidders must also provide evidence of their past and present commitment to staff training and the development of Nigerian nationals, as well as their experience in partnering with local communities.
Another critical requirement in the EOI document is that interested firms must not have any existing loans or financial liabilities with banks or other financial institutions. This is to ensure that the selected O&M contractors are not financially over-leveraged and can focus on the successful operation of the refineries.
“A firm with outstanding financial liabilities may face challenges in raising the necessary capital to fund the operations of the refineries, which could jeopardize the entire project,” it noted.
NNPC has assured potential bidders that crude supply to the refineries will be guaranteed after the takeover by private firms. However, this arrangement is intended to be temporary.
According to NNPC spokesperson Olufemi Soneye on Sunday, the O&M contract is designed to last a maximum of five years.
“NNPC is committed to ensuring that the refineries have a steady supply of crude oil, which is critical to their operations. However, the private firms that will take over the operations will do so on a temporary basis, for a period of up to five years,” Soneye disclosed.
The deadline for the submission of Expressions of Interest is September 12, 2024. Interested firms must submit their EOIs along with all necessary documentation as outlined in the EOI document.
The tender process will be conducted in three stages: Expression of Interest, Technical, and Commercial. This process is designed to ensure that the most qualified and capable firms are selected to operate the refineries.
The Warri Refining and Petrochemical Company is one of Nigeria’s major oil refining and petrochemical companies, located in Warri, Delta State.
Established in 1978 and operational since 1979, WRPC was initially designed to process 100,000 barrels of crude oil per day. It has undergone several upgrades and expansions to improve its capacity and operational efficiency.
In the late 1980s, a petrochemical plant was integrated into the WRPC, allowing it to produce a range of petrochemical products, including polypropylene and carbon black—vital raw materials for industries such as plastics, rubber, and packaging.
The Kaduna Refining and Petrochemical Company is located in Kaduna State. The KRPC plays a key role in processing crude oil into various refined products essential for the Nigerian economy.
Established in 1980 and operational since 1983, KRPC was designed to process both Nigerian crude oil and imported crude oil from Venezuela and Kuwait. This flexibility allows KRPC to produce a variety of refined products, including liquefied petroleum gas, gasoline, kerosene, diesel, fuel oil, and other petrochemicals.
Similar to WRPC, KRPC has faced significant operational challenges, including frequent breakdowns, inadequate maintenance, and a lack of investment in infrastructure. These issues have led to reduced output and prolonged shutdowns.
One of the most significant challenges for KRPC has been its reliance on imported crude oil for a significant portion of its operations. This dependency has made the refinery vulnerable to global oil market fluctuations, supply chain disruptions, and foreign exchange constraints, all of which have impacted its operations.
Pipeline vandalism and sabotage have further disrupted the supply of crude oil to the facility, while aging infrastructure has contributed to frequent breakdowns, requiring costly repairs and limiting the refinery’s ability to operate at full capacity.