The companies can rebid, however, the Bureau of Public Enterprises said.
The refinery is a key industry strategic element, as it allows its owner, especially when they are also a driller, to meet what are becoming progressively more stringent "local content" rules regarding local refining.
Sir Emeka Offor's Chrome Energy Services is probably more attuned to those demands and able to meet them readily. Firms that are not able to access the limited refining capacity that will likely exist when Joint Development Zone oil starts flowing mayl be between a rock and hard place as they wait in line for processing.
It was at least another temporary setback for Offor and Chrome, which holds 42.9 percent of ERHC Energy's stock through its Cayman Islands parent company, and which was believed to be on the short list of two bidders closing in on the deal, and the development - in Nigeria's superheated petroleum industry - suggests that powerful forces, perhaps multinationals loaded with cash, persuaded officials to start over again so they can participate. A story from Punch of Nigeria, however, says that can't happen as only these four bidders are being permitted to rebid.
The country had announced plans to take the refinery private tomorrow, Dec. 21, but that deadline is now in limbo.
Chrome's ERHC Energy subsidiary is facing problems from Sao Tome officials in bids for five blocks it won on May 31 in the Nigeria-Sao Tome and Principe Joint Development Zone.
Here is the article from today's ThisDay Online:
BPE Cancels Bids for PH Refinery
Says investors fail qualification test
By Mike Oduniyi, 12.19.2005
Privatisation of the Port Harcourt refinery has again suffered another setback after the Bureau of Public Enterprises (BPE) cancelled the bids submitted by four consortia for the acquisition of a controlling stake in the nation’s biggest refinery.
The BPE in a statement released yesterday said that the consortia namely, Chrome /Chinese Petroleum Corpora-tion/Essar Oil Consortium; the Oando/Shell Group; Transn-ational Corporation (Transcorp) and Refinee Petroplus Consortium, did not attain the minimum qualifying mark of 60 points to qualify for the opening of their Financial Bids.
The companies have, however, been granted the right to re-submit fresh bids for the refinery while BPE said it had communicated a new deadline for submission to the companies.
According to the BPE statement signed by its Head, Public Communications, Mr. Chigbo Anichebe, evaluation of the bids from the companies placed greater emphasis on the presence, within a technically qualified consortium, of a competent refinery owner/operator with experience in refineries of similar complexity as Port Harcourt refinery.
The criteria used included:
- Experience of the technical operator in the ownership, operation and management of a crude oil refining plant, which carried 30 points;
- Quality and credibility of the bidder’s Post Acquisition Plan (“PAP”) for Port Harcourt Refinery, which carried 40 points;
- Demonstrated financial capacity to finance up to $200 million of capital expenditure by PHRC within the next three years, 20 points and;
- Adequate measures for addressing labour and other social considerations, 10 points.
“Regrettably, none of the bidding consortia attained the minimum qualifying mark of 60 points to qualify for the opening of their Financial Bids.
“From the outcome of the evaluation exercise, each Consortium’s technical submission was seriously deficient in certain key areas. We will be communicating in writing with each Consortium, the key areas in which their submissions were deficient, which may help them should they elect to submit a new bid by the new deadline.
“Given that the technical submissions did not attain the minimum qualifying technical score, bidders have been advised to collect their un-opened Financial Bid envelopes and Bid Bonds from BPE,” the privatisation agency added.
Although the BPE did not give the new deadline for submission of the fresh bids, it has however, altered the agency’s set time table to have the Port Harcourt Refining Company (PHRC) privatised by December 21, 2005.
This would be the second time tenders for the company, which houses two refineries, the Old Port Harcourt refinery with 60,000 barrels per day (bpd) capacity and the 150,000 bpd New Port Harcourt refinery, would be thrown out after similar bids from interested investors were cancelled in December 2003.
Apart from the Port Harcourt refineries, the Federal Government also plans to privatise the 110,000 bpd Kaduna refinery, leaving only the 125,000 bpd Warri refinery for the Nigerian National Petroleum Corporation (NNPC) to manage.
The PRHC according to BPE data, has an authorised Share capital of N5 million, divided into 5 million Ordinary shares of N1 each.
Only one of the two refineries in the company is currently in operation, following the closure of the Old refinery while plant capacity utilisation presently stood at 60 percent.
The newspaper Punch of Nigeria laso has a substantial article on the failed bids and says that no new bidders will be permitted to participate. Although Mike Oduniyi's ThisDay Online story is good, the Punch writers, Clara Nwachukwu and Oluyinka Akintunde provides more detail. Here is the story from Punch of Nigeria:
PH Refinery: Oando, Transcorp, others fail BPE’s evaluation
Clara Nwachukwu and Oluyinka Akintunde
The Bureau of Public Enterprises has said that none of the four investors bidding for the purchase of the Port Harcourt Refinery met BPE’s qualifying marks to proceed to its financial bid stage.
The four investors earlier pre-qualified to bid for the purchase of the PHRC are Oando Group; Transnational Corporation Consortium; Chrome/Chinese Petroleum Corporation/Essar Oil Consortium and Refineri Petroplus Consortium.
The BPE in a statement on Monday said each of the four bidders was deficient in in certain key areas of its technical bid and failed to score up to 60 points.
As a result, the bureau said, the bidders had been given an extension for a limited period (not stated) to submit new bids.
The statement signed by BPE’s Head, Public Communications, Mr. Chigbo Anichebe, explained, “The evaluation of the technical bids was based on the some criteria, which placed greater emphasis on the presence within a technically qualified consortium of a competent refinery owner/operator with experience in refineries of similar complexity as Port Harcourt refinery.”
He listed the criteria as follows:
- Experience of the technical operator in the ownership, operation and management of a crude oil refining plant - 30 points;
- Quality and credibility of the bidder’s Post-Acquisition Plan for Port Harcourt Refinery – 40 points;
- Demonstrated financial capacity to finance up to $200million of capital expenditure by PHRC within the next three years – 20 points; and
- Adequate measures for addressing labour and other social considerations – 10 points.
“Regrettably, none of the bidding consortia attained the minimum qualifying mark of 60 points to qualify for the opening of their financial bids,” Anichebe added.
According to him, “The BPE, in consultation with its advisers, has decided to extend for a limited period for existing bidders only, a new bid submission deadline, which has now been communicated to bidders.”
He stated that the technical evaluation was done in conjunction with the bureau’s advisers, which constituted independent teams to carry out the evaluation of the technical bids submitted by the four consortia.
“We will be communicating in writing with each consortium, the key areas in which their submissions were deficient, which may help them should they elect to submit a new bid by the new deadline,” the statement added.
The BPE said the bidders had been advised to collect their un-opened financial bid envelopes and bid bonds from the BPE.
The BPE had earlier pre-qualified the four investors for the sale of 51 per cent government equity in PHRC, during which they were advised to demonstrate financial capacity to finance up to $200 million of capital expenditure on the refinery within the next three years if they hope to scale BPE’s criteria for the refinery.
The PUNCH, Tuesday, December 20, 2005
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