Moribound refineries: Senate says N11trillion, millions in other currencies wasted

Sharon EboesomiOctober 24, 20235 min

Senators expressed outrage over the humongous amounts spent on various turn around maintenance on the refineries with loss, inefficiency and corruption to show as results.

 

The Senate has mandated its committee on Downstream Petroleum in collaboration with relevant ad-hoc committees to thoroughly investigate all contracts awarded for the rehabilitation of all the state-owned refineries between 2010 and 2023.

It also directed the committee to ascertain progress on ongoing works in all refineries to forestall waste and corruption, and to interrogate the Federal Ministry of Petroleum Resources, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian National Petroleum Company Limited (NNPCL), and the Bureau of Public Enterprises (BPE) on the best approach to commercialising and/or ensuring profitability of the state-owned refineries.

These are resolutions adopted by the lawmakers following the debate on a motion on the “urgent need to investigate the various Turn Around Maintenance (TAM) projects of Nigerian refineries in order to uncover waste and forestall further waste of scarce public resources,” on Tuesday. 

In his lead debate, the sponsor, Senator Karimi Sunday Steve (APC, Kogi West), noted the country’s poor level of refining, which has led to a string of losses over the years, has resulted in it spending roughly twice as much on rehabilitation.

Karimi also noted that state-owned refineries have been a serious drain pipe on public finance, depriving the citizens of the joy of being an oil-producing nation. The refineries are in Port Harcourt (two), Rivers State, Kaduna, Kaduna State and Warri in Delta State.

According to him, since 2010 to date, Nigeria is estimated to have spent 11.35 trillion (N11,349,583,186,313.40) excluding other costs in other currencies which include $592, 976, 050.00, £4,877,068.47 and 3,455,656.93 Pounds, on the renovation of refineries, yet they are unproductive.

He added that the Federal Government has spent over N6 trillion between 2010 and 2020 on fuel subsidy due to Nigeria’s low refining capacity and has spent almost twice the amount on TAM of its four refineries between 2010 and 2022.

“Despite the moribund state of the four refineries, the operating costs of these refineries between 2010 and 2020 are estimated at N4.8 trillion Naira. The refineries are estimated to make a cumulative loss of N1.64 Trillion within 4 years.”

The lawmaker further lamented that the Federal Government has carried out rehabilitation projects in Port Harcourt Refinery Company (PHRC) over seven (7) years from 2013 to 2019 at an estimated cost of N12,161,237,811.61 yet, it still not operating.

The senator said further: “In addition, on 18 March 2021, a rehabilitation contract was executed between NNPC/PHRC and Tecnimont SPA at a Lump Sum of $1,397, 000,000.00 only (about N575 billion Naira amidst global public criticism. Phase 1 of the Project is expected to be completed in 28 Months after the 7 contract, Phase 2 within 24 months and Phase 3 within 44 months of execution. 

“Despite this, the Port Harcourt refinery remains a money pit. Going by projections and representations from NNPCL the renovation works ought to be completed and operations of the Refinery commenced by June 2023.

“In a bid to revitalize the Warri refinery, the Federal Government has injected huge Public funds into revamping Warri Refinery & Petrochemical Company limited to the tune of over $28, 219,110,067.10 between 2014 and 2019. 

“Around the 24th June 2022 the Federal Executive Awarded Maintenance Services for Quick Fix Repairs of Warri Refinery to Daewoo Engineering and Construction Limited at $497,328,500.00 yet, at the moment the Warri Refinery is inactive. 

“This is different from the 2017 contract award to Saipem Contracting Nigeria Limited for Tech Plant Survey of the Warri and Kaduna Refineries at £2,025,000.32.”

He equally informed that the Kaduna Refinery and Petro-Chemical Company (KRPC) has over the past 10 years, gulped N2,266,248,434.00 in the name of rehabilitation, yet the refinery remains unproductive.

“The Nigerian National Petroleum Company Limited (NNPCL) approved a $741Million renovation deal with Daewoo Engineering and Construction Limited to renovate Kaduna Refinery in February 2023 and it is intended to restore the refinery to production of 110,000 barrels of petrol per day (at least 60 percent capacity) by early 2024.”

Karimi warned that if a thorough investigation into past and present rehabilitation project is not launched, the cycle of awarding ineffective turn-around maintenance contracts may continue, saying:

“This has maintained the status quo in which rehabilitation contracts have evolved into conduit pipes for syphoning public funds while Nigerian citizens continue to lament the high cost of petroleum products due to the state-owned refinery’s moribund condition.”

In his contribution, Senator Adams Oshiomole (APC, Edo North), who decried the lack of accountability and inefficiency of the refineries’ employees, charged the responsible regulatory agencies and the NNPCL to match their words with actions.

“It has become a tradition of always telling us the refineries will work. We hear when contracts will be delivered but at the end of the day nothing is produced because these refineries are not working.

“They need to give an account and tell us why they are not working rather than giving promises that they don’t keep,” he maintained.

He also urged his colleagues to take the motion seriously, saying “this is one of the most patriotic duties this Senate can carry our. We must take this very seriously and the Committee must oblige to take it seriously and give account.”

On his part, Senator Aliyu Wadada (SDP, Nasarawa West), posited that “the high level of corruption in the country can be linked to these problems in the refineries.

“In trying to change the ways here, a very strong ad hoc committee must be put in place as afar as this issue is concerned.”

Others who supported this motion are, Senators Isa Jibrin (APC, Kogi East), Etang Williams (APC, Cross River Central), Olalere Oyewunmi (PDP, Osun West), Adamu Aliero (PDP, Kebbi Central), Solomon Olamilekan (APC, Ogun West), Mohammed Danjuma Goje (APC, Gombe Central), Darlington Nwokocha (LP, Abia Central) and few others.

In adoting the motion, the Senate also called on the NNPCL, NUPRC and the Liquifued Natural Gas (LNG) to explain the nation’s preparation for green energy sources in line with the Paris Agreement on Climate Change.

The senate is also currently probing the massive crude oil theft being perpetrated in the country.

Sharon Eboesomi

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