How Nigeria Lost N366,524bn to Non-functional Refineries

The House of Representatives has called for a forensic audit into all rehabilitation projects the Warri, Port Harcourt and Kaduna Refineries.

This is as the House pegs the total losses from incurred from the non-functional refineries from 2010 to 202 at N366,524,140,000

The House noted that the total cost of operations and running the three refineries from 2010 – 2020 was N4,800,602,450,000.00.

This was contained in a report by the ad-hoc committee of the House of Representatives on the state of refineries in the country chaired by Hon. Ganiyu Abiodun Johnson from Lagos State.

The committee was set up in March 2022 to interface with the Chief Executive Officer of Nigerian National Petroleum Company (NNPCL) Limited, Mele Kyari, and other stakeholders in the oil and gas sector to give an account of the true state of refineries in the face of biting fuel scarcity at the time.

Moving the motion for the consideration of the report at Tuesday’s plenary session, Johnson said “That the House do consider the Report of the Ad-hoc Committee on the State of Refineries in the Country on the Need to Ascertain the Actual Daily Consumption of Premium Motor Spirit (PMS) in Nigeria (HR. 21/01/2022) and approve recommendations therein”.

The report noted “that the nation’s three (3) refineries became unproductive from the year 2010 making the following range of losses: Port Harcourt refinery Company (PHRC) at 7.6% losses to the tune of 132,526.17 Billion naira from 2012; WRPC at 6% losses to the tune of 111,376 Billion naira from 2014; and KRPC at 10% losses to the tune of 122,621.97 Billion naira from 2014.

“that from the year 2010 to 2019, the nation’s refineries were performing sub-optimally with an annual combined capacity of less than 30% therefore in the year 2019 the NNPC obtained Executive approval and shut down the refineries for comprehensive rehabilitation to restore the plants to a maximum of 90% nameplate company utilization.

“that the total losses from the non-functional refineries since year 2010 is put at Three Hundred and Sixty-Six Billion, Five Hundred and Twenty-Four Million, One Hundred and Forty Thousand (366,524,140,000) Naira only.

“that the total cost of operations and running the refineries from 2010 – 2020 is put at Four Trillion, Eight Hundred Billion, Six Hundred and Two Million, Four Hundred and Fifty Thousand Naira (₦4,800,602,450,000.00) only;

“that the Port Harcourt Refinery Company (PHRC) carried out rehabilitation projects over a period of seven (7) years ranging from 2013 to 2019 valued at about Twelve Billion, One Hundred and Sixty-One Million, Two Hundred and Thirty-Seven Thousand, Eight Hundred and Eleven Naira, Sixty-One Kobo (₦12,161,237,811.61) only;

“that the Warri Refinery and Petrochemical Company (WRPC) carried out rehabilitation projects over a period of six (6) years ranging from 2014 to 2019 valued at about Twenty-Eight Billion, Two Hundred and Nineteen Million, One Hundred and Ten Thousand, and Sixty-Seven Naira, Ten Kobo only (₦28,219,110,067.10”.

Similarly, the committee’s recommendations were “that continuous legislative oversight of the ongoing rehabilitation works at the Port Harcourt and Warri refineries be ensured in order to achieve results; that the NNPC should ensure the immediate award of contract for the rehabilitation of the Kaduna Refinery;

“That the NNPC should take full advantage of the Petroleum Industry Act 2021 passed by the National Assembly to fast track the rehabilitation programme of the refineries empowered by the deregulated Business Environment and ensure that the refineries are restored to a maximum 90% nameplate utilization.

“That a forensic audit be conducted on all the rehabilitation projects in the three (3) refineries”.

Speaking on the synopsis, Johnson stated that the report was a result of the work done by the ad-Hoc committee which took a holistic overview of the 3 refineries in Nigeria and ascertained that these refineries were producing at less than 30% of original capacity.

He stated that both the Warri and Port Harcourt refineries have been awarded and were under rehabilitation.

The committee also recommended that the Kaduna refinery should be speedily awarded for rehabilitation.

He called for continuous oversight of Nigerian refineries by Parliament.

But Chairman of the Committee of the Whole and Deputy Speaker, Ahmed Idris Wase asked the committee to bring out a clear list of recommendations that should be a template to deal with the specific issues the committee was set up to achieve.

To this end, the consideration was deferred for further legislative action.

Meanwhile, the House received the report of its adhoc committee on the need to investigate the petroleum products subsidy regime in Nigeria laid by Hon. Ibrahim Almustapha Aliyu at Wednesday plenary.

“That the House do receive the Report of the Ad–hoc Committee on the Need to Investigate the Petroleum Products Subsidy Regime in Nigeria from 2013 – 2022”, the lawmaker said.

The consideration of the report is also expected to happen at a later date.

It will be recalled that President Bola Ahmed Tinubu during his inaugural speech on Monday said that the era of subsidy was over, a pronouncement that has since plunged the country into emerge crisis due to the price of Petroleum Motor Spirit (PMS) that had skyrocketed.