The House of Representatives has called for a forensic audit of all the rehabilitation projects for the comatose Port Harcourt, Warri and Kaduna refineries estimated at N11.35 trillion from (2010-2020).
This followed the adoption of the report of the House of Representatives Ad-hoc Committee on the State of Refineries in the Country on the Need to Ascertain the Actual Daily Consumption of Premium Motor Spirit (PMS) in Nigeria at plenary, yesterday.
The decision to conduct the forensic audit is sequel to the omissions noted in the submissions made by the Nigerian National Petroleum Company Limited (NNPCL) to the Committee, seeming duplication of projects observed by the panel and possible double payments made.
The Ad-hoc Committee, chaired by Ganiyu Abiodun Johnson (APC, Lagos) stated that it could not
ascertain the actual cost of rehabilitating the Nigerian Refineries within the period (2010-2020) due to obvious omissions and other improprieties, hence the estimated sum of N11.35 trillion.
The report of the ad-hoc committee was slated for consideration by the House last Tuesday but it was stepped down for further legislative action.
This was as the chairman of the Committee of the Whole and deputy speaker of the House, Ahmed Wase, directed the committee to bring out a clear list of recommendations that should be a template to deal with the specific issues the panel was set up to achieve.
Giving nod to the reworked report, the House urged FBNQuest Merchant Bank to refund to the nation the total sum of $438.012 paid to it as Retainer Fees from 2017-2018 as the Financing Advisory Contract for the rehabilitation of the three refineries which was not successful and suspended due to the financing consortia not reaching agreeable terms for the transaction with the NNPCL.
The Green Chamber also asked NNPCL and the Contractor (Tecnimont SPA of Italy) to ensure that Phase One of the rehabilitation works in Refinery Area 5 of the Old Port Harcourt Refinery with the processing capacity of 60,000 Barrels Per Day earlier expected to be restored to 54,000 barrels per day of processing capacity representing 90% capacity utilisation by March, 2023, should unfailingly meet the new target date of September, 2023.
It urged NNPCL and Tecnimont SPA of Italy to ensure that Phase Two of the rehabilitation works in Refinery Areas 1&2 of the New Port Harcourt Refinery with an installed capacity of 150,000 Barrels Per Day be restored to the estimated processing capacity of 135,000 Barrels Per Day, representing 90% capacity utilisation to deliver a combined processing capacity of 189,000 Barrels Per Day from the old and new refineries and achieve the targeted date of December 2023.
Other recommendations of the Ad-hoc adopted by the House were that: “The NNPCL and the Contractor (Daewoo E&C Nigeria Limited) be also urged to ensure that the WRPC Maintenance Services for Quick-Fix Repairs project for the restoration of Refinery Areas 1&2 to operate at a minimum 60 percent with an expected processing capacity of 75,000 Barrels Per Day petroleum product output meets the 12 months’ target date and comes on-stream in September, 2023.
“The 10th National Assembly be mandated to carry out legislative oversight on the ongoing rehabilitation works to ensure that the nation achieves the expected processing capacity of 189,000 barrels per day from the PHRC (54,000 BSPD from OPHR+135,000BSPD from NPHR) and 75,000BSPD from WRPC plus whatever additional processing capacity from the Dangote Refinery, in order to meet the nation’s domestic needs for petroleum products by December, 2023.
“The 10th National Assembly should be further mandated to ensure continuous legislative oversight of the ongoing rehabilitation programme by the NNPCL at the Port Harcourt, Warri and Kaduna refineries in order to achieve project target timelines and rehabilitation of the refineries to bring them back to maximum refining capacity.
“The NNPCL should ensure the immediate award of contract for the rehabilitation of the Kaduna Refinery and Petrochemical Company (KRPC); the NNPCL should strive to achieve the 3-4-year standard regular Turn Around Maintenance (TAM) global best practice for the Refineries after the full and completion of rehabilitation works to ensure sustainable refinery operations and value maximisation.
“The Federal Government and the NNPCL should upgrade the pipelines security architecture for maximum surveillance, protection and pipeline security to avoid incessant pipeline vandalism, ensure regular and continued crude oil feedstock supply to the refineries when fully rehabilitated and functional.
“The Federal Government and the NNPCL should consider outsourcing the Operations and Maintenance (O&M) of the refineries to reputable international oil companies to guarantee reliability, optimal operational availability and to maximise value for money to the nation.
“The Federal Government and the NNPCL should suspend the DSDP (Direct Supply-Direct Purchase) arrangement, remove subsidy on Petroleum Motor Spirit (PMS), deregulate prices on the product to ensure competitiveness and provide adequate palliative measures to reduce anticipated economic impact and hardship on Nigerians and the economy.
The ad-hoc committee found that the three refineries became unproductive from year 2010 making a range of losses; with Port Harcourt put at 7.6% losses to the tune of N132.52 billion from 2012; Warri at 6% losses amounting to N111.37 billion naira from 2014; and Kaduna at 10% losses to the tune of N122.62 billion from 2014.
It also found that from year 2010 to 2019, the refineries were performing sub-optimally with an annual combined capacity of less than 30% and 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 utilisation.
The panel observed that the total losses from the non-functional refineries since 2010 is put at N366.52 billion and the total cost of operations and running them from 2010 -2020 stood at N4.80 trillion.
The committee further found that the total amount spent on oil subsidy payments for the period under consideration from 2010 to 2020 is put at N5.948 trillion.
“The Port Harcourt Refinery Company (PHRC) carried out rehabilitation projects over a period of seven (7) years ranging from 2013 to 2019 valued at about Twelve Billion, One Hundred and Sixty-One Million, Two Hundred and Thirty-Seven Thousand, Eight Hundred and Eleven Naira, Sixty-One Kobo (N12,161,237,811.61) only.
“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 billion.
“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.
“The total cost of rehabilitation for the three (3) refineries based on the submissions of the NNPC from 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, EUR2,852,068.15 and GBP3,455,656.93).
“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 (two million, twenty-five thousand Euros and thirty-two Cents).
“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,” the Committee added.
