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Cat cracker project to be completed next month
Petrotrin president Khalid Hassanali has denied that the company’s shutdown of the catalytic cracking unit (cat cracker) for upgrading over the past few months had cost $2 billion. However, Hassanali revealed the cost of the project jumped from US$156 million to a whopping US$439 million and has had a four-year delay, largely because of the procurement process that was used in awarding the contract.
Speaking with reporters at the Energy Chamber’s luncheon at Para Suites Hotel, La Romaine yesterday, Hassanali said he was surprised by Opposition Senator Terrence Deyalsingh’s claim in the Senate on Tuesday that the cat cracker shutdown, for 16 months, had cost $2 billion.
“That did take me by surprise because the $2 billion that was spent over the period when the cat cracker was out of service was really for purchasing blending stock—and let me just explain, we did not stop the refinery over the last few years. The refinery has been running.” He said it was taken out of service in November or December last year, but the refinery was still producing gasoline and diesel.
“In general, that wasn’t an expenditure over which heads should roll, as I saw on one TV channel, but it was more of an operating expenditure for blending stock.” He said the intent of the upgrade in 2006 was to increase capacity from 26,000 to 35,000 barrels and be completed by 2008.
However, he said the contract comprised firstly a lump sum portion for engineering, procurement and some management and fabrication services and secondly, the rest of the works was let on a cost reimbursable basis, meaning that Petrotrin took all the costs of construction. He said since then the cost estimate was revised twice in 2008 and 2010.
“The point is the reimbursable nature of this procurement process has not worked for us, because the project, due to finish in 2008, is now being completed in 2012 and the cost has also moved from US$156 million” to US$439 million.
“And therefore, there have been delays, there have been cost overruns, and only within recent times, within sometime this year that we have had some extra delays—one was a broiler accident and the other was, unfortunately a death in the refinery.
“That cost us between one and three months’ delay. But not the enormous delay and the enormous capital overrun as a result of the procuring process which was then put into place.” He said the cat cracker upgrade is expected to be completed in the next couple of weeks and will see a much more versatile refinery.
This cat cracker project—more formally called the fluidised catalytic cracking unit (FCCU) upgrade—was part of the wider Gasoline Optimisation Programme (GOP), which also included construction of an Isomerisation Unit, a Continuous Catalyst Regeneration Platforming Unit (CCR), an Alkylation Unit/Acid Plant, upgrade to the existing FCCU (also called the Catcracker) and construction of offsites and utilities.
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