Nigeria’s four refineries in three locations – Port Harcourt (2), Warri and Kaduna – with a combined refining capacity of 650,000 barrels per day, are idle – the state they have been in for about 15 years. Meanwhile, businesses and citizens are languishing in pains of hardship arising from high cost of fuel and deteriorating standard of living.
Without putting in place an effective measure to cushion the effects of removal of subsidy, the new government during the inauguration on May 29, 2023, announced an end to fuel subsidy. It also effected a 60 percent devaluation of the Naira through the unification of the multiple exchange windows which has seen the local currency depreciate to N770/$ and $810 at the official and parallel windows respectively. The pump price of petrol jumped from N195/litre to N680/litre. Inflation has climbed to 22.79 percent as of June, 2023. Universities and polytechnics have increased their fees while the electricity distribution companies (DisCos) are about increasing their tariffs amid poor service delivery.
The Nigerian National Petroleum Company Limited (NNPCL) last year announced that the country will end fuel importation by mid-2023. This has not been achieved.
Nigeria has continued to rely totally on imported refined petroleum products (petrol, diesel, kerosene, aviation fuel and the others) to meet her daily energy needs. This costs huge sums of money ranging from $21 billion to $28 billion per year, between 2020 and 2022.
Dr. Oladunni Owo, Principal Consultant, Blackgold Energy Authorities, a Lagos-based oil and gas consulting and advisory firm, put the fuel importation figure at $28 billion annually.
Of major concern here is the huge public funds already committed to the rehabilitation of the idle refineries. Equally worrying is the government’s attitude of embracing opaqueness in its oil and gas service delivery.
The Senate on July 5, 2023, rejected a motion seeking to investigate the moribund condition of the nation’s refineries despite spending several trillions of naira on their maintenance.
This came barely two months after former president Muhammadu Buhari left office on May 29, 2023 when he doubled as Minister of Petroleum Resources for eight years. The motion was moved by Karimi Steve (APC, Kogi West) at the plenary.
In the motion, Steve prayed the Senate to constitute an ad-hoc committee to investigate all contracts awarded for the rehabilitation of all four federal government-owned refineries between 2010 and 2023.
He also prayed that the committee should visit all the government refineries to ascertain their conditions, prevent any attempt to waste resources, stop any form of corruption and also interrogate authorities in the Ministry of Petroleum Resources and officers of Nigerian National Petroleum Company Limited (NNPCL) for their role in the failure of the refineries to produce oil.
Mr Steve added that the committee, when constituted, should invite managers of NNPCL and other petrol agencies to present their plans on Green Energy Sources in line with the Paris Agreement on Climate Change to the Senate for possible review.
He stated that the Nigerian government had spent N11.35 trillion on the renovation of refineries from 2010 till date.
He also said the federal government had spent over N6 trillion between 2010 and 2020 on fuel subsidy due to Nigeria’s low refining capacity, and almost twice the amount also spent on rehabilitating refineries in Port Harcourt, Kaduna and Warri between the same period under review.
The Kogi senator noted that despite the moribund condition, the operating cost of the federal government refineries between 2010 and 2020 is estimated at N4.8 trillion.
Mr Steve said he was disturbed that the Port Harcourt Refinery Company is still not functioning despite the Nigerian government carrying out rehabilitation projects in the refinery for seven years between 2013 – 2019 at an estimated cost of over N12 billion.
He also said over N28 billion had been spent on revamping the Warri Refinery and Petrochemical Company Limited from 2014 to 2019.
He added that over N2 billion have also been spent on the rehabilitation of the Kaduna Refinery and Petrochemical Company in the past 10 years, but it remains unproductive.
But, the motion and prayers were rejected following the decision of the majority of the senators who spoke on it to step it down.
The Senate President, Godswill Akpabio, therefore, announced that the motion would be stepped down until relevant ministers have been appointed by President Bola Tinubu.
The refineries spend billions of naira on salaries, wages and other benefits on workers despite producing no refined product in recent years. For instance, the Port Harcourt refinery reported no income in 2020 but incurred administrative expenses of N19.22 billion, according to its audited reports. The refinery employed 487 new staff members in 2020. Its directors received N99.75 million as emoluments in 2020, a 67 percent increase from N59.66 million in 2019.
The workers, among the highest paid in the country, earn their salaries, promotions, allowances and go on local and foreign training while the facilities are idle.
On January 9, 2023, the immediate past Minister of State for Petroleum, Timipre Sylva, revealed that the rehabilitation of the 60,000 bpd refinery was being completed and was going to be started by Q1 2023.
The refinery was initially scheduled to commence operations in December 2022.
“Our promise has been that the 60,000 bpd plant within the Port Harcourt refinery by the end of Q4 2022, it is being completed and is going to be started by Q1 2023 as promised,” Sylva said while giving an update on the Port Harcourt refineries during the ministry of petroleum resources 2022 scorecard in Abuja.
Similarly, the Group Chief Executive Officer of NNPCL, Mallam Mele Kyari, had assured Nigerians of the company’s resolve to complete the then ongoing rehabilitation of Port Harcourt Refinery by March, 2023.
“The promise was to start the fuel plant, which is the 60,000 bpd component of this activity by the last quarter of 2022, but it is not practical. So, we will start it off in the first quarter of 2023, otherwise every other process is going on,” Kyari stated. The refinery was never delivered.
The NNPCL had in July 2022 disclosed that Nigeria will no longer import refined petroleum products from mid-2023.This was based on the expected completion of ongoing maintenance of the nation’s refineries and the almost completed Dangote platform.
Kyari, who made the disclosure during the weekly ministerial media briefing, also lamented the phenomenon of oil theft bedeviling the society. According to him, Nigeria lost about $10 billion in oil theft as of 2022.
Speaking on achieving an end to petroleum products’ importation by the middle of 2023, the NNPC boss explained that with the total production from the national refineries, which were being refurbished and would be ready the following year, and the products from Dangote Refinery, which Nigeria has a 20 per cent stake, the country should be able to meet domestic needs without any need for importation from mid-2023.
Dangote Refinery was inaugurated at the twilight of former President Buhari administration on May 22, 2023 expected to commence production “soon”. The completion date has been shifted to 2025.
