June 7, 2023

Refineries: Reps call for forensic audit of N11.34trn spent on rehabilitation in 13 years

FUPRE VC lauds FG on commercialisation of Gas Project

…Say N5.9trn spent on subsidy payments from 2010-2020

By Levinus Nwabughiogu

The House of Representatives, yesterday, demanded forensic audit of all rehabilitation projects at Port Harcourt, Warri and Kaduna refineries.

The demand followed the consideration of the recommendations of a report by its ad-hoc committee on the state of refineries and the need to ascertain the actual daily consumption of Premium Motor Spirit, PMS, otherwise known as petrol, in Nigeria.

It will be recalled that the consideration of the report was deferred when presented last week because the chairman of the committee of the whole and deputy speaker, Ahmed Idris-Wase, last week told the committee chaired by Ganiyu Johnson to give clear cut recommendations based on its specific mandate.

Re-presenting the report at plenary, yesterday, Johnson said the findings of the committee revealed that the rehabilitation of the three refineries had cost the nation N11.35 trillion in 13 years, beginning from 2010.

He said the refineries became unproductive from 2010, making a range of losses, with Port Harcourt put at 7.6 per cent losses to the tune of N132.52 billion from 2012; Warri at 6 per cent losses amounting to N111.37 billion from 2014 and Kaduna at 10 per cent losses to the tune of N122.62 billion from 2014.

The report stated that from  2010 to 2019, the refineries performed sub-optimally, with an annual combined capacity of less than 30 per cent.

According to the report, the NNPC obtained an executive approval and shutdown the refineries for comprehensive rehabilitation to restore the plants to a maximum of 90 per cent utilisation.

The report  said total losses from the non-functional refineries since 2010 were placed at N366.52 billion, while the total cost of operations and running them from 2010–2020 stood at N4.80 trillion.

It further indicated that subsidy payments totalling N5.9 trillion was made from 2010 to 2020.

The committee, however, recommended that the NNPCL fast tracked the rehabilitation programme of the refineries empowered by the legislative intent for a deregulated business environment and restore the refineries to a minimum 90 per cent nameplate capacity utilisation.

The committee also recommended that NNPCL and the contractor (Tecnimont SPA of Italy) be urged to ensure that phase one of the rehabilitation works in Refinery Area 5 of the Old Port Harcourt Refinery, OPHR, with the processing capacity of 60,000 barrels per day earlier expected to be restored to 54,000 barrels per day of processing capacity representing 90 per cent capacity utilization by March, 2023, should unfailingly meet the new target date of September, 2023.

It asked that a bank (names withheld) refund to the nation the total sum of US$438,012.44 paid them as retainer fees from 2017-2018 as the financing advisory contract for the rehabilitation of the three refineries was not successful and was suspended due to the financing consortia not reaching agreeable terms for the transaction with the NNPC.

Other recommendations include  “that the NNPCL and the Contractor (Tecnimont SPA of Italy) be further urged to ensure that phase two of the rehabilitation works in Refinery Areas 1&2 of the New Port Harcourt Refinery (NPHR), with an installed capacity of 150,000 barrels per day be restored to the estimated processing capacity of 135,000 barrels per day.”