Senate probes $396m refineries maintenance expenditure
by Sanni Onogu, Abuja
THE Senate Committee on Petroleum Resources on Thursday got a mandate of the Red Chamber to investigate the disbursement of over $396 million by the Nigeria National Petroleum Corporation (NNPC) on the Turn Around Maintenance (TAM) of the four refineries between 2013 and 2015.
It was given the mandate following a motion titled: “The moribund refineries in the country” sponsored by Senator Yusuf Abubakar Yusuf.
Yusuf, representing Taraba Central Senatorial District, in his lead debate, noted that the country has four refineries with two located in Port Harcourt and one each in Kaduna and Warri.
He noted that the refineries were established to adequately supply Liquefied Petroleum Gas (LPG), Premium Motor Spirit (PMS), Dual Purpose Kerosene (DPK), Automotive Gas Oil (AGO), Low Pour Fuel Oil (LPFO), High Pour Fuel Oil (HPFO) and Aviation Turbine Kerosene (ATK) for local consumption and exports.
He lamented that despite the alleged disbursement of $396 million on the TAM within two years, “there is no tangible result to show in terms of local production”.
The senator insisted that the amount being spent to reactivate the refineries in the last 25 years notwithstanding, Nigeria is still solely dependent on importation of petroleum products for domestic use.
He warned that the country may again slide into recession if the humongous amount on TAM is added to the huge ‘under recoveries’ presently being incurred by the NNPC on the importation of petroleum products. He put the funds being used on product’s importation at over N123.25 billion.
Yusuf said: “The country, through NNPC, has in the past 25 years spent billions of United States (U.S) dollars in Turn-Around Maintenance of the refineries, the latest being over $396 million spent between 2013 and 2015 without meaningful result.”
“The refineries have remained moribund in the last 15 to 20 years and they are almost reaching total collapse due to lack of proposer maintenance of the facilities with a poor average capacity utilisation, hovering between 15 per cent and 25 per cent per annum.
“Despite the huge spending on TAM of refineries, NNPC recently announced a cumulative loss of N123.25 billion in 10 months (January to October, 2019), putting the total revenue of facilities at N68.82 billion, while total expenses incurred was N192.1 billion within the same period.”
He warned that such wastage amidst the nation’s tight economy, if not addressed, may take the country back into recession.
“Such losses, when averted and combined with the huge expenditures in ‘under recovery’ on fuel pump price and properly channeled into full rehabilitation and construction of modern refineries, would positively impact on the economy and save the country from the embarrassment of importation of petroleum products and its ripple effect”, he said.
Contributing, Senator Ibikunle Amosun (Ogun Central), identified lack of maintenance culture as one of the challenges confronting the country.
He said it was not the first time attention was being drawn to the near-collapse of the refineries, urging his colleagues to do a thorough job during the investigation process.
Amosun said: “Oil should be a blessing to us but in Nigeria, it makes a lot of establishments lazy. We should be concern about it.
“The refineries are bad and people are now taking the crude outside the country and bringing back refined products to the country on exorbitant prices.”
In its resolution, the Red Chamber mandated the Committee on Petroleum Downstream, Upstream and Gas to carry out a holistic investigation on the TAM expenditures and the state of the refineries as well as convoke a stakeholders’ conference to chat a way forward.