Africa’s biggest oil-producing country has spent billions of dollars in turnaround maintenance of refineries in the past 25 years with nothing to show for it, the Senate said on Thursday.
Despite the huge expenses, the oil production facilities have remained moribund as Nigeria still imports more than 80 percent of needed petroleum products which puts immense pressure on its foreign exchange, national reserves, and infrastructure.
“The country through NNPC has in the past 25 years spent billions of US dollars in turn-around maintenance of the refineries, the latest being over $396 million spent between 2013 and 2015 without meaningful result,” said Yusuf Yusuf (Taraba Central), who led the debate on the floor of the Senate.
“The refineries have remained in moribund state in the last 15-20 years and are almost reaching total collapse due to lack of proper maintenance of the facilities with a poor average capacity utilisation hovering between 15 percent and 25 percent per annum,” he said.
The huge expenses on the ailing refineries are taking a toll on other critical sectors of the economy, with the nation’s education, health, security and agricultural sectors all struggling for funds, while the country remains the world’s poverty capital.
The Senate therefore resolved to probe the Nigerian National Petroleum Corporation (NNPC) over $396 million specifically expended on turn-around maintenance of refineries in the country between 2013 and 2015.
Describing as very poor the state of refineries in the country, the Senate lamented that the Federal Government has “wasted” billions in the guise of maintaining the refineries that are obviously not working. It said the government was simply inept and not ready to revive the oil production facilities.
The senators are also concerned that the inactivity of the refineries has prevented the creation of job opportunities to the teeming unemployed youths and therefore resolved that they would probe the deplorable state of the refineries vis-a-vis the huge resources has invested in revamping them.
“Despite the huge spending on turn-around maintenance 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,” Yusuf said.
Data from NNPC showed the country’s ailing refineries had an operating deficit of N123.2 billion between January 2019 and October 2019.
Further analysis showed throughout 2019, the deficit in Nigeria’s refineries has moved at a geometric rate. In January 2019, the refineries recorded a deficit of N8.6 billion which skyrocketed to N18.89 billion in February. In March, the refineries recorded a much higher deficit of N34.9 billion which increased further to N59.9 billion in May.
By June 2019, Nigeria’s refineries recorded an operating deficit of N77.4 billion which ballooned to N104.4 billion in August. In September and October, the refineries had losses of N111.5 billion and N123.2 billion, respectively.
“Billions of dollars have been spent on turn-around maintenance (TAM) of these refineries since inception with nothing to show and nobody to be held accountable,” Charles Akinbobola, a Lagos-based energy analyst, said.
To carry out the investigation, the Senate has mandated its Petroleum – Upstream/Down Stream and Gas Committees to oversight the refineries and the relevant government agencies involved and report back to it for further legislative action.
The position of the Senate was sequel to a motion relied on orders 42 and 52 of the Senate Rules sponsored by Yusuf.
“Oil should be a blessing to us but in Nigeria, it makes a lot of establishments lazy. We should be concerned about it. The refineries are bad and people are now taking the crude outside the country and bringing back refined products to the country at exorbitant prices,” said Ibikunle Amosun (Ogun Central).
Meanwhile, Senate President Ahmad Lawan noted that if the Petroleum Industry Bill (PIB) is finally passed, it would address the challenges faced by the oil sector. He assured that work on the bill would commence in February.
SOLOMON AYADO (Abuja) & DIPO OLADEHINDE (Lagos)
