Refineries: Reps to investigate alleged $396.33m maintenance cost

The House of Representatives will investigate the sum of 396.33 million dollars allegedly spent in four years on Turn Around Maintenance of the nation’s three refineries in Port Harcourt, Warri and Kaduna.

This followed a unanimous adoption of a motion moved by Rep. Ifeanyi Momah (APGA-Anambra) during plenary presided over by the Deputy Speaker of the House, Mr Idris Wase, on Thursday.

The motion was titled, “Call for Investigation of the 396.33 million dollars allegedly spent in Four Years on Turn Around Maintenance of the Nation’s Three Refineries”.

Moving the motion, Momah said that Nigeria currently had three major refineries situated with installed capacity to refine 445,000 barrels of oil, enough for domestic consumption and export.

The lawmaker said the objective of domestic consumption and export had not been realised owing to a combination of factors.

He said the factors included corruption and inefficiency in the running of the refineries with regular “Turn Around Maintenances” mismanaged over the years.

“The House also recalled a report in a national daily of Friday Oct. 18, 2019 by the Nigeria National Resource Charter (NNRC) on “Reducing Losses from Refineries Operations”.

The report reviewed the operations of the Nigerian National Petroleum Corporation (NNPC) from a cost perspective of efficiency and value for money.

“It observed the assertion by the NNRC in the report that the NNPC spent a whopping $396.33 million between 2013 and 2017 to carry out repair works under the “Turn Around Maintenance” (TAM) scheme on its three decrepit refineries at Port-Harcourt, Warri and Kaduna.

“It also observed 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.”

The legislators said that the three refineries contributed less than 10 per cent annually to Nigeria’s Gross Domestic Product (GDP).

It also noted that the refineries were among the league of refineries with the highest operating costs worldwide and their consolidated capacity utilisation dropped to 6.1 per cent at the end of Sept. 2017.

The House expressed concern that the goal of establishing local refining facilities to contribute to national development continued to elude the country’s oil and gas industry.

“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 with the same 650,000 barrels per day.”

The lawmakers also expressed concern on the maintenance costs of the refineries which had remained comatose and left the country dependent on importation of refined petroleum products for its domestic consumption.

The House called on the Federal Government to consider divesting a certain percentage of its shareholding in the 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 TAM at the three refineries by the NNPC between 2013 to date.

The committee is expected to report back in eight weeks for further legislative action.