…NNPC to pay for use of pipelines
By Michael Eboh
The Nigerian National Petroleum Corporation, NNPC, weekend, disclosed that private investors would be engaged to finance the rehabilitation and replacement of its aging downstream assets across the country, especially petroleum pipelines.
In a statement in Abuja, Group Managing Director of the NNPC, Mallam Mele Kyari, stated that some of the assets were as old as 40 years and were long overdue for replacement.
The NNPC boss explained that the investors would be financing the replacement under the Finance, Build, Operate and Transfer, BOT, model, noting that the model became imperative in the Corporation’s journey to rehabilitate its downstream infrastructure which over time had become vulnerable, lost value and integrity due to age and incessant vandalism.
He added that the investors would be able to recoup their investments, especially in the pipelines, from the tariffs that the NNPC would be paying for the use of the rehabilitated pipelines.
According to him, no fewer than 78 companies submitted virtual bids, indicating their willingness to undertake the rehabilitation of critical downstream pipelines, associated depots and terminal infrastructure of the NNPC, through the financing model.
He said: “Some of these assets are as old as 40 years and they are due for replacement; and when you want to do a replacement of this scale, you do need a lot of resources.
“And we know that we require these assets so we decided that we bring in private partners who will fund these pipelines, they will construct it, they will operate it with us and then ultimately they will fully recover their investment from the tariff which we will pay for using these pipelines. And as soon as they recover their cost and their margin, they will hand over these assets back to us.”
He explained that by the end of the first quarter of 2021, the final partners of the bid opening for investors interested in the downstream assets’ rehabilitation would be selected.
He also assured the bidders that the Nigerian Petroleum Exchange, NIPEX, portal, which was deployed for the pre-qualification exercise, was a time-tested technology that would not give room for any human indiscretion.
Kyari insisted that the exercise was in fulfilment of NNPC’s avowed commitment to transparency and accountability as an Extractive Industries Transparency Initiative (EITI) partner company and as directed by President Muhammadu Buhari, that all its operations must be guided by integrity.
He said: “This is not possible to achieve if we do not have the leadership disposition that is in support of transparency. I can confirm to all of you that it is the clear directive of Mr. President that this company must be accountable and must be transparent to its shareholders.
“We must take all necessary steps to make sure that our transactions are known to the citizens of this country, that we do things for the common good of all of us and that in doing our business, we must ensure integrity.”
Explaining the bidding process, General Manager, Supply Chain Management, SCM, of the NNPC, Mrs. Sophia Mbakwe, stated that at the end of the submission of virtual bids, 78 companies submitted bids.
Also speaking, Chief Operating Officer, Downstream, Ms Lawrencia Ndupu, who was represented by the Managing Director, Petroleum Products Marketing Company, Musa Lawan, said the Nigerian Pipelines and Storage Company, NPSC, operates 5,120 length of pipelines which traverses the entire country with two coastal depots in Lagos and Calabar, assuring that the public bid opening processes is being done transparently.