₦11.350 trillion spent to restore 3 Nigeria’s moribund refineries between 2010, 2020

₦11.350 trillion spent to restore 3 Nigeria’s moribund refineries between 2010, 2020

The House of Representatives disclosed during an investigation hearing on the state of refineries and daily usage of premium motor spirit (PMS) that an estimated sum of N11.350 trillion had been spent on restoration of the three of the country’s moribund refineries with nothing substantial to show for it.

This was contained in the report/recommendations of the Ad-hoc Committee, chaired by Hon. Ganiyu Johnson, which investigated the ‘state of refineries in the country, and the necessity to identify the actual daily use of Premium Motor Spirit (PMS), in Nigeria’.

According to the Deputy Speaker, Hon. Idris Wase, the report was considered during the Committee of the Whole but it was later postponed until Thursday to allow the Ad-hoc Committee to clearly list the recommendations that should serve as a template to deal with the specific issues the Ad-Hoc Committee was formed to address.

The Ad-hoc Committee emphasized the need for continued legislative oversight of the ongoing restoration operations at the Port Harcourt and Warri refineries in order to ensure value for public funds awarded for refinery rehabilitation.

The Committee also emphasized the importance of NNPCL awarding a contract for the rehabilitation of the Kaduna Refinery as soon as possible, while urging the NNPCL to take full advantage of the Petroleum Industry Act 2021 passed by the National Assembly to expedite the rehabilitation programme of the refineries empowered by the deregulated business environment and ensure that the refineries are brought back to a maximum of 90% nameplate efficiency.

In its findings, the Ad-hoc Committee observed that the “three refineries became unproductive from 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 year 2010 to 2019, the nation’s refineries were performing sub-optimally with an annual combined capacity of less than 30% therefore in year 2019 the NNPC obtained an Executive approval and shutdown 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 N366,524,140,000 only.

“That the total cost of operations and running the refineries from 2010 – 2020 is put at N4,800,602,450,000 only.

“That the Port Harcourt Refinery Company (PHRC) carried out rehabilitation projects over a period of seven years ranging from 2013 to 2019 valued at about N12,161,237,811.61 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 N28,219,110,067.10.

“That Kaduna Refinery and Petrochemical Company (KRPC) also carried out rehabilitation works over the period under review valued at about N2,266,248,434.69.

“That the total cost of rehabilitation for the three refineries based on the submissions of the NNPC from year 2013 to 2019 is put at N42,646,596,313.40 only.

“That other project costs were reported in foreign currencies at KRPC such as USD43,672,537.56; £2,852,068.15 and GBP3,455,656.93.

“That the SAIPEM Contracting Nigeria Limited was awarded a contract in 2017 by the NNPC for the Technical Plant Survey of Warri and Kaduna Refineries for the Contract Price of €2,025,000.32.

“That the total value of the contract for the Technical Plant Survey of Warri and Kaduna Refineries awarded to SAIPEM was €2,025,000.32 and the total sum of money received by SAIPEM is €1,822,500.29 while the total sum outstanding is €202,500.03.

“That FBNQuest Merchant Bank (FBN-MB) was engaged by the NNPC between 2017 and 2020 as Financial Advisor on a Project Financing Transaction for the rehabilitation of all the nation’s three refineries and placed on a monthly Retainer Fee of US$28,000 starting from August 2, 2017.

“That FBNQuest Merchant Bank (FBN-MB) received a total of US$438,012.44 from August 2017 to December 2018 as Financial Advisor’s Retainer Fee from the NNPC.

“That the Financial Advisors activities on the Refineries Rehabilitation Programme were suspended by the NNPC on 21st December, 2018 due to the Financing Consortia not reaching agreeable terms for the transaction with the NNPC.

“That the NNPC in 2016 obtained a Presidential approval of the sum of US$2.1 billion for the rehabilitation of refineries to be funded over a 3-year period.

“That the National Assembly approved provisions for the refineries rehabilitation of N100 billion, N100 billion and 109.326 billion in 2020, 2021 and 2022 Fiscal Framework, respectively.

“That the total deductions from the Federation Account for the rehabilitation of refineries from 2020 to 2021 are put at 1,191,670,000,000 only.

“That the Federal Government expended N6.96 trillion between 2006 and 2020 on petroleum subsidy – (NEITI).

“That the total amount spent on oil subsidy payments for the period under consideration from 2010 to 2020 is put at N5,948,140,000,000 only.

“That a Detailed Inspection of Equipment plus Integrity Study for Rehabilitation of PHRC was signed on 14th February 2019 with Tecnimont SPA for the total lump sum price of US$51.45 million.

“That contract for the Engineering, Procurement, Construction, Installation and Commissioning of works for the Rehabilitation of Port Harcourt Refinery was signed 6th April 2021 between NNPC/PHRC and Tecnimont S.P.A. for the Lump Sum Contract Price of $1,397,000,000.00 only;

“That the NNPC awarded a Maintenance Services Contract for Quick-Fix Repairs of WRPC to Daewoo E&C Nigeria Limited on 24 June 2022 at a total sum of $492,328,500.

“That the total cost of rehabilitating the nation’s refineries from 2010 to date may be put at N600,840,736,313.40 only.

“That after due considerations and analysis of the data before the Committee, the total actual cost of rehabilitating the Nigerian refineries may be put at N11,349,583,186,313.40 only.

“That these cost were gotten from four sub heads such as; Cost of Operations and running Refineries, Cost of Rehabilitation Projects, Subsidy Payments, and Deductions from Federation Account for rehabilitation.

“That other additional actual costs of rehabilitations were funded in foreign currencies to the tune of USD 592,976,050.00; £4,877,068.47 and GBP 3,455,656.93…” the report stated.

Leave a Reply

Your email address will not be published.