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Nigeria spent N11.350trn on Turn Around Maintenance of 3 moribund refineries between 2010, 2020 — Reps


Nigeria spent N11.350trn on Turn Around Maintenance of 3 moribund refineries between 2010, 2020 — Reps

•Ask FG to revoke 37 inactive refinery licences

The House of Representatives during the consideration of the investigative hearing into the state of refineries and daily consumption of premium motor spirit (PMS) disclosed that an estimated sum of N11.350 trillion was spent on rehabilitation of the three moribund refineries so far.

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

The report was considered during the Committee of the Whole, was however deferred to Thursday, to enable the Ad-hoc Committee to clearly list the recommendations that should be a template to deal with the specific issues the Ad-Hoc committee was set up to achieve, according to Deputy Speaker, Hon. Idris Wase.

In the bid to ensure value for public funds approved for the rehabilitation of the refineries, the Ad-hoc Committee stressed the need to ensure continuous legislative oversight of the ongoing rehabilitation works at the Port Harcourt and Warri refineries be ensured in order to achieve results.

The Ad-hoc Committee also stressed the need for NNPCL to ensure immediate award of contract for the rehabilitation of the Kaduna Refinery as well as urged NNPC to take full advantage of the Petroleum Industry Act 2021 passed by the National Assembly to fast track the rehabilitation programme of the refineries empowered by the deregulated business environment and ensure that the refineries are restored to a maximum 90% nameplate utilization.

The Ad-hoc Committee also urged the Federal Government to ensure the activation of all the 37 non active licences approved and issued to certain private refineries for maximum operations or such licences be revoked.

The lawmakers also urged NNPC to pay the outstanding sum of €202,500.03 as balance for the outstanding payments due to SAIPEM Nigeria Limited on the contract for the Technical Plant Survey of Warri and Kaduna Refineries as the job was concluded and fully reported.

The Ad-hoc Committee also underscored the need to conduct a forensic audit be conducted on all the rehabilitation projects in the three refineries.

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.

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