House Probes $396m Expenditure on Refineries’ Maintenance

Adedayo Akinwale in Abuja

The House of Representatives has ordered investigation into how $396.33 million was allegedly spent between 2013 and 2017 to carry out turn around maintenance on the country’s three refineries in Port-Harcourt, Warri and Kaduna.

The House ordered the investigation at the plenary yesterday following the adoption of a motion brought by Hon. Ifeanyi Momah.

He said Nigeria had been living with the derogatory appellation of being a major oil producing nation that was heavily reliant on importation of refined petroleum products for its domestic consumption as a result of its low local refining capacity.

Momah stressed that Nigeria has three major refineries with installed capacity to refine 445,000 barrels of oil per day, enough for domestic consumption and export.

He lamented that this objective has not been realised owing to a combination of factors, including ‘corruption’ and ‘inefficiency’ in the running of the refineries, whose regular turn around maintenance has been mismanaged over the years.

Momah cited a report in THISDAY of Friday October 18, 2019 by the Nigeria National Resource Charter (NNRC) on “Reducing Losses from Refineries Operations,” which reviewed the operations of the Nigerian National Petroleum Corporation (NNPC) from a cost ‘perspective of efficiency and value for money.

According to him, the NNRC implements the Natural Resources Charter (NRC) in Nigeria, which is a set of principles intended for use by governments, societies and the international community to determine how best to manage natural resources wealth for the benefit of current and future generations.

Momah noted that the a ssertion by the NNRC in the report that the NNPC spent $396.33 million between 2013 and 2017 to carry out repair works under the turnaround maintenance scheme on its three decrepit refineries at Port-Harcourt, Warri and Kaduna was worrisome.

He added that the claim that the NNPC also spent N276.872 billion on operating expenses of the refineries between 2015 and 2018, as well as $36 billion on importation of petroleum products between 2013 and 2017 was a cause for concern.

The lawmaker decried that the three refineries has contributed less than 10 per cent annually to Nigeria’s Gross Domestic Product (GDP), but lamented that they are also among the league of refineries with the highest operating costs worldwide, as their consolidated capacity utilisation dropped to 6.1 per cent at the end of September, 2017.

Momah expressed concern that the strategic goal of establishing local refining facilities and their associated supply chain as a socio-economic game-changer that would result in national development had continued to elude the country’s oil and gas industry.

He said: “Going by the reckoning of the NNRC, the $36 billion the country spent on importation of petroleum products in the last four years could have built four brand new refineries of similar capacity for the country with the same 650,000 barrels per day processing capacity as the refinery that Dangote Group is currently building in Lagos State.”

The House therefore called on the federal government to consider divesting a ‘certain percentage of its shareholding in Port Harcourt, Warri and Kaduna refineries to competent investors under transparent and fair bidding process.

It also mandated “the Committee on Petroleum Resources (Downstream) to conduct an investigative hearing on the processes of the “Turn Around Maintenance” (TAM) at the Port Harcourt, Warri and Kaduna refineries by the Nigerian National Petroleum Corporation (NNPC) between 2013 and date and report back in eight weeks for further legislative action.”