BusinessDay
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Nigeria refineries employ 1,586 new staff, pays N69 bn salary in 2020

Nigeria’s government-owned four refineries employed 1,586 new staff, paying salaries, wages and other benefits to unproductive workers to the tune of N69 billion, a BusinessDay calculation has shown.

According to the latest audited statements of Nigerian National Petroleum Corporation (NNPC), two plants located in Port Harcourt with an installed capacity of 210,000 bpd employed 487 new staff members in 2020, northern Kaduna refinery with an installed capacity 110,000 of barrels per day (bpd) employed 655 new staffs, while the Warri refinery with an installed capacity of 125,000 bpd employed 444 new staffs within the same period.

Further analysis of the audited report revealed out of the 487 staff members employed in Port Harcourt refinery, 430 were senior and management staff, amounting to 88.2 percent, with huge financial implications. Only 57 were junior staff members.

The audited report showed the Port Harcourt refinery paid the 487 new workers N3.93 billion annually, indicating that each of them takes an average of N8.072 million annually or N672, 713 monthly.

Out of 675 staff engaged by the refinery in 2019,the financial statement showed 656 were management and senior staff, representing 97 percent of the total, with huge financial implications.

In Kaduna refinery, the management employed 655 new staff which comprised 501 new staff in the operations department and 154 new administrative staff.

Read also: NNPC refineries lose N473.3 billion in 6 years, operated below 10% capacity

Despite generating zero revenue, total pay received by the staff of Kaduna refinery within 2020 also amounted to N26 billion implying that the NNPC sought monies from outside the refinery to pay staff salaries.

For the Warri Refinery, its audited account by Oguobi & Co and Ijebor+Ijebor, Chartered Accountants, showed the organisation employed an average of 444 new employees in 2020. The new employee comprises 80 services workers and 364 operational staff.

About N20.5 billion were spent on direct labour cost, indirect labour cost and staff welfare cost within the same period.

“The point is that the refineries are still badly managed. The faster the corporation becomes a limited liability company, the better,” Oil and Gas Governance Consultant Henry Adigun said.

He added, “How did the NNPC make the profit they said they made when the inefficiencies are there. The profit and loss do not show anything. They simply want to make it attractive to the stockman”.

Former President of the Nigerian Society of Petroleum Engineers Joe Nwakwue told BusinessDay that the only thing that the corporation could have done was to sell off the refineries.

“If you have a factory and it’s not producing, you will have to pay the gateman and even the insurance company,” Nwakwue said.

Recall, Africa’s biggest oil-producing country is planning to take advantage of a golden opportunity to play regional dominance in the West Africa refinery market following the move by the Federal Executive Council to approve contracts for the rehabilitation of Warri and Kaduna refineries at a cost of $1.4 billion.

Rather than pump more cash into repairs and maintenance, some analysts say the ownership structure and business model of Nigeria’s refineries need to change.

The poor outcomes under government management validate this viewpoint. For instance, South Korea boasts of little oil reserves and a 1,000 bpd condensate capacity maintains three of the world’s biggest refineries run by private investors at 90 percent capacity.

Nigeria holds the 10th largest oil reserves in the world of 37 billion barrels and imports refined petrol while its creaking refineries perform less than 10 percent of their capacity on a good day.

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