Refineries’ fraudulent maintenance probe without conviction
Pessimism keeps growing among Nigerians about any positive outcome from the plan by the National Assembly to probe the $36.4 billion spent on fuel import and refinery maintenance in four years after several others of such probe were initiated with no effect. Below is analysis by NewTelegraphng.com:
The daily injection of about N1.6 billion on fuel subsidy seemed to have angered members of the House of Representatives penultimate weekend. The lower legislative chamber vented its anger within an area of its jurisdiction with the probe of $36.39 billion expended on importation of fuel and refineries maintenance by the Federal Government in four years began.
While $36 billion was said to have been spent on importation of fuel, $396.33 million is allegedly spend on the Turn-Around Maintenance of the petroleum refineries in Port Harcourt, Warri and Kaduna.
The probe
The move by the House followed unanimous adoption of a motion entitled ‘Call for investigation of the $396.33m allegedly spent in four years on turn around maintenance of the nation’s three refineries.’
At the plenary at the weekend, Mr Ifeanyi Momah called for the probe, alleging that the amount spent on maintenance of the facilities had not produced results.
The House, therefore, called on the Federal Government to consider “divesting a certain percentage of its shareholding in the Port Harcourt, Warri and Kaduna refineries to competent investors under a transparent and fair bidding process.”
Also, the House mandated the Committee on Petroleum Resources (Downstream) to conduct an investigative hearing into the maintenance expenses beginning from 2013 till date.
It asked the committee to report back within eight weeks for further legislative action.
Momah said Nigeria had been living with the “derogatory appellation” of being a major oil producing nation that is heavily reliant on importation of refined petroleum products for its domestic consumption as a result of its low refining capacity.
He said this was in spite of the fact that the country has three major refineries with installed capacity to refine 445,000 barrels per day, enough for domestic consumption and export.
The lawmaker said: “This objective has not been realised owing to a combination of factors, including corruption and inefficiency in the running of the refineries.
“The House observes the assertion by the Nigeria National Resource Charter in the report that the NNPC spent a whopping $396.33 millio between 2013 and 2017 to carry out repair works.
“The House also observes the claim that the NNPC spent N276.872 billion on operating expenses of the refineries between 2015 and 2018, as well as $36 billion on importation of petroleum products between 2013 and 2017.”
According to the lawmaker, the strategic goal of establishing local refining facilities as a socio-economic game-changer has continued to elude the country’s oil and gas industry.
Cynicism from within
The probe, check by New Telegraph showed at the weekend, has been greeted by pessimism expressed by expert who believe that the investigation may go the way of other previous ones before it.
Petroleum Engineer, Adebayo Alamutu, who commended the boldness of House of Representatives to look into the matter of alleged fraud in the refineries’ TAM, maintained that this was not the first time that such probe panel had been instituted.
He said: “The question begging for answer now is that will this move by the House of Representatives not go the way of the previous ones?”
Alamutu’s view was corroborated by Monsurat Oseni-Hamzat, an economist.
According her, “many Nigerians will naturally believe that nothing will come out of the new move by the House of Representatives. The onus is now on the lawmakers to prove them wrong by ensuring that probe is taken to a logical conclusion.”
A history of probe foreclosure
Investigations by this newspaper revealed that the Federal Government had jettisoned any plans to review the investments made between 1999 and 2015 on the refineries, despite ineffectiveness of the contracts.
About N264 billion invested in this respect is likely to be forgotten.
Instead, a former Minister of State for Petroleum Resources, Ibe Kachikwu, said in a podcast that the Federal Government was aggressively pursuing the refineries’ improvement programme to realise its agenda to end fuel importation by 2019.
A senior officer at the Ministry of Petroleum Resources told this newspaper that government would not reopen books on the investments made on maintenance of the installations.
The nation’s three refineries located in Port Harcourt, Warri and Kaduna, documents of the NNPC showed, had gulped up to $1.746 billion or N264 billion using a 16 year average USD/naira exchange rate of N150.99/$1.
The source said: “It is a consensus that we move forward and tread softly on money spent on TAM, especially between 1999 and 2011. Even though the $1.746 billion covers spending up to 2015, we all know that the president had said he was not interested in probing spending during the time of former President Olusegun Obasanjo and Umaru Musa Yar’adua.
“I can assure you that except a miracle happens, no one in this government will open up the investments made on TAM. Instead, the ministry is determined more than before to move away from the approach of quick fixes and undertake a comprehensive revamp of the plants.”
Who spends what?
The four refineries have a combined capacity to refine 445,000 barrels of crude per day.
Inefficiencies of these refineries had worsened the deficit in supply of petroleum products and raised dependence on importation.
The $1.746 billion TAM investments is different from the $308 million reportedly spent for the same purpose by the military governments of late General Sani Abacha ($216 million) and General Abdusalami Abubakar (rtd) $92 million.
A former GMD of NNPC, Funsho Kupolokun, had, according to report, said that over $1 billion was committed to refineries’ repairs between 1999 and 2007.
After the late President Musa Yar’Adua stopped the sale of the refineries in 2007, NNPC reportedly announced it had awarded contract to a Nigerian firm to carry out a comprehensive TAM on all the refineries. The contract sum as revealed by the then NNPC boss, Abubakar Yar’Adua, was $57 million.
In 2009, the then GMD of NNPC, Alhaji Mohammed Sanusi Barkindo, also announced that the Corporation spent $200 million on the maintenance of the Kaduna refinery.
In 2012, NNPC was reported in local media to have planned repair of the refineries with N152 billion.
A former Minister of Petroleum Resources, Alison-Madueke, was quoted to have said $32 million had already been paid for the materials needed for the said repairs.
NNPC, in January 2015, had in a statement, said it took decision in 2011 to rehabilitate all refineries, using the Original Refinery Builder (ORB) of each of the refineries.
Maintaining that government was ready to go ahead with plans to put the refineries back to shape through a transparent bidding process, Kachikwu reiterated that neither Oando nor Agip had been handed over the right of maintenance and running of any of the refineries.
His statement came days after the Senate rejected an earlier announcement that Agip, a subsidiary of the Italian oil giant, Eni, had committed to repairing the Port Harcourt refinery, as part of a $15 billion investment that includes building a 150 thousand barrel per day refinery and a power plant.
Kachikwu had also said Nigeria was facing an emergency situation in the petroleum sector requiring urgent attention.
He said: “When I made the comment that I want to see us exiting fuel importation by 2019, and that I will leave if I don’t accomplish it, it was to energise everybody to the fact that 2019 is not a play game.
“We need to work hard for that to happen. We need the cooperation of everybody, including the National Assembly, Presidency, and other agencies like the Bureau of Public Procurement (BPP), to speed up the process. We are in an emergency situation. We need to plan ahead to ensure that fuel supply continue to be available.”
To sustain the current uninterrupted fuel supply in the country in the last two years, the minister said the government spent about N3.4 trillion on the importation of about 20 million metric tons of petroleum products between January and December last year.
Besides, he said, about 30 per cent of the total foreign exchange allocation from the Central Bank of Nigeria went into importation of petroleum products, apart the logistics of the importation and distribution programme.
Last line
The commencement of probe by members of Femi Gbajabiamila-led House of Representatives is commendable. However, the House will only be seen as courageous if it carries out the probe as promised with a view to bringing those who are found wanting to book.
Also, though the pessimism expressed by some Nigerians over this probe is legitimate due to long years of disappointment from previous probes, it should not discourage them from joining hands with the House of Representatives to ensure that this fresh probe is seen to a logical end.
