Reps order probe of NNPC’s $396m expenditure on refineries TAM

An expenditure of about $396.33 million spent by the Nigeria National Petroleum Corporation (NNPC) on Turn Around Maintenance of the nation’s refineries in four years, will come under scrutiny as the House of Representatives has ordered its Committee on Petroleum Resources (Downstream) to conduct an investigative hearing on it.

The committee will conduct an investigative hearing on the processes of the “TAM at the Port-Harcourt, Warri and Kaduna refineries by the Nigerian National Petroleum Corporation (NNPC) between 2013 to date.

The Committee is to report back in eight (8) weeks for further legislative action.

The House also resolved that the Federal Government should consider divesting a certain percentage of its shareholding in Port-Harcourt, Warri and Kaduna refineries to competent investors under transparent and fair bidding process.

These resolutions were made after considering a motion brought by a member, Ifeanyi Momah at plenary on Thursday.

According to the lawmaker, “Nigeria has 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 local refining capacity;

“Also we are aware that Nigeria has three major refineries situated at Port Harcourt, Watri and Kaduna, with installed capacity to refine 445,000 barrels of oil, enough for domestic consumption and export.”

Momah also noted that the nation has not been able to achieve the objective owing to a combination of factors, including corruption and inefficiency in the running of the refineries which regular “Turn Around Maintenances” have been mismanaged over the years.

Momah cited a report in This Day Newspaper of Friday October 18, 2019 by the Nigeria National Resource Charter (NNRC) on “Reducing Losses from Refineries Operations” which reviewed the operations of the Nigerian National Petroleum Corporation (NNPC) from a cost ‘perspective of efficiency and value for money

He further observed that the assertion by the NNRC in the report that the NNPC spent a whopping $396.33 million between 2013 and 2017 to carry out repair works under the TAM scheme on its three decrepit refineries at Port-Harcourt, Warri and Kaduna.

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“Also observes the claim that the NNPC also 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 Momah, the three refineries contribute less than 10 per cent annually to Nigeria’s Gross Domestic Product (GDP) and they are also among the league of refineries with the highest operating costs worldwide, as their consolidated capacity utilisation, dropped to 6.1 percent at the end of September, 2017.

The lawmaker also lamented that the strategic goal of establishing local retining facilities and its associated supply chain as a socio-economic game-changer that will result in national development has contmued to elude the country’s oil and gas industry.

“Further observes that going by the reckoning of the NNRC, the $36 billion the Country spent on importation of petroleum products in the last four years could have built four brand new refineries of similar capacity for the Country with the same 650,000 barrels per day processing capacity as the refinery that Dangote Group is currently building in Lagos State;

“Worried about the huge costs of undertaking the “Turn Around Maintenance” of the refineries, which, despite all the expenses, have remained comatose, leaving the Country dependent on importation of refined petroleum products for its domestic consumption at great expenses to the nation and national pride,” he said.

The lawmakers passed the motion without dissent when it was put into voice vote by the Deputy Speaker, Idris Wase, who presided.

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