By Paul Ajayi
The Federal Government has assured Nigerians that the country will not resort to borrowing $1.5 billion to finance the rehabilitation of the Port Harcourt refinery in Rivers State.
The Minister of State for Petroleum Resources, Mr. Timipre Sylva gave the assurance over the weekend while dousing concerns that the project would worsen the nation’s debt profile.
He stated that the government does not intend to borrow all the funds to rehabilitate the refinery which he said would be functional in 18 months.
Sylva disclosed that a subsidiary of the Nigerian National Petroleum Corporation (NNPC) – Nigerian Petroleum Development Company Ltd (NPDC) – and others would contribute the money to be used for the project.
“There are questions asked – when are we going to fix our refineries, when are we going to rehabilitate our refineries? Now, we are rehabilitating the refineries but unfortunately, it is generating all these (issues),” the minister said during an interview aired on Channels Television’s Sunday Politics.
Sylva disclosed that the federal appropriation will contribute $800 million to the project.
“Let me tell you how this rehabilitation is going to be funded; it is not going to be all debts, we are not going to borrow all the monies that are going into the rehabilitation (project).
Some of the money will come from NNPC’s internally generated revenue – from NPDC, some of it will come from the Federal appropriation, and just a little fraction will come from the African Export-Import Bank (Afreximbank)” he added.
The minister gave an assurance that there was no need for Nigerians to worry about how the loan to be secured would be repaid.
He explained that going by the way the project was structured, the operations of the refinery would pay back the funds to be used.
Sylva insisted that the rehabilitation of the refinery would not really be a debt that would add to the general debt burden of the country.
According to him, a commercial discussion between the NNPC and Afreximbank on how the money will be paid from the operations of the refinery is ongoing.
Giving a further breakdown of how the money would be sourced, the minister said, “The NNPC is going to spend about $200 million from its internally generating revenue sources, while the Federal appropriation will put in about $800 million and it is already broken down into three parts.
“The 2020 appropriation will give $350 million, 2021 appropriation will give another $350 million, and 2022 appropriation will give another $100 million, making it all $800 million from appropriation, and then the rest of it will now come from Afreximbank.”
Recall that the FG has earmarked the sum of $1.5 billion to fund the project – a decision that has sparked controversy and debates in various parts of the country.