Refineries: Reps to conduct comprehensive audit of $25bn allegedly spent on turn around maintenance

The House of Representatives, on Wednesday, unveiled plans to conduct comprehensive audit of the estimated sum of $25 billion allegedly spent on Turn Around Maintenance (TAM) of the four refineries over the past 25 years by successive administrations.

The resolution was passed sequel to the adoption of a motion of ‘Matter of urgent public importance’, in pursuant to Order 8, Rule 4 titled: Motion on the need to ensure transparency and accountability in the rehabilitation exercise of the nation’s refineries,’ sponsored by Hon Onofiok Luke.

The House decision came on the heel of the Federal Executive Council (FEC) approval of the sum of $1.5 billion, about N575 billion, for immediate commencement of rehabilitation work on the 32-year-old Port Harcourt refinery, phased at an estimated completion period of 44 months (approximately – 4 years) with three components funding from Nigerian National Petroleum Corporation (NNPC), Internally Generated Revenue (IGR), budgetary allocations provisions, and Afreximbank.

Hon Luke observed that the Port Harcourt Refineries located in Alesa Eleme Southeast of Port Harcourt operates two oil refineries, including an old plant commissioned in 1965 that can process 60,000 barrels (9,500 m3) per stream day, as well as the new plant commissioned in 1989, which has a capacity of 150,000 barrels (24,000 m3) per stream day.

“The House is concerned that NNPC had allegedly spent about $25 billion in turnaround maintenance of refineries in the past 25 years, this latest prevailing development is coming after promises by the current administration that government would no longer spend on the facility. Previous rehabilitations notwithstanding, the Nigerian National Petroleum Corporation (NNPC) audit report had last year revealed that three of the nation’s four refineries recorded N1.64 trillion cumulative losses in their 2014 to 2018 details.

“Despite processing no crude oil in June last year, the three refineries still cost the country N10.23 billion in expenses. The three refineries processed no crude because of the rehabilitation works being carried out on them, therefore, there was no associated crude plus freight cost for the three refineries since there was no production but operational expenses that amounted to N10.27 billion. This resulted in an operating deficit of N10.23 billion by the refineries.

ALSO READ: I was misquoted on comments on Appeal Court Justices’ appointment ― NBA President

“The House is concerned that just in July 2017 major structural construction began on Dangote 650,000 bpd Refineries with partial refining capability likely in 2022. The same lag period that Rehabilitation would be carried out on the 210,000 bpd Port Harcourt refineries.

“The House is deeply worried by the public uproar on this latest initiatives, the voice of the National Assembly must be recorded to ensure judicious use of the proposed $1.5bn considering facts that the facility has failed to perform after years of rehabilitation/repair/maintenance.”

To this end, the House mandated its Committee on Petroleum Resources (Downstream) to carry out an investigative hearing and conduct a comprehensive audit of funds previously spent on the rehabilitation/repairs and maintenance of the Port-Harcourt Refineries and other refineries in the country and the key performance indicators therefrom.

As stipulated in the motion, the Committee is to examine the Performance Bond, Assurance, Warrantees and Guarantees put in place for Operating and Maintaining the Plants after Commissioning and report to the House for further Legislative Action, within 6 weeks.

The Committee was also mandated to “urge the Federal Government to grant license and provide incentives for the building and construction of Modular Refineries” while the House Committee on Compliance is to ensure compliance to the resolution.






Refineries: Reps to conduct comprehensive audit of $25bn allegedly spent on turn around maintenance

You might also like

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. AcceptRead More