Why probe of N11.3tr refineries’ maintenance cost will end futile

• HEDA insists move aims at extortion
• ‘We are watching, Centre for Transparency says
• Stakeholders seek end to waste of taxpayer’s money
• FG to sanction oil companies over crude oil supply to local refineries 

Tagging their move as another avenue to cash out from the nation’s resources after possibly wasting time on the exercise, civil society organisations, oil and gas experts as well as legal practitioners yesterday, said the move by the Senate to recover the alleged over N11.3 trillion spent on the nation’s moribund refineries as Turn Around Maintenance (TAM) will remain an effort in futility.

Casting a vote-of-no-confidence on the Senate, the stakeholders said previous lawmakers both at the upper and lower chambers had since Nigeria returned to democracy, done same exercise only to get their own cut from the national oil company while spending the nation’s resources and time on investigations that would not achieve desired results.

The Senate last week, said N11.35 trillion was spent on turn around maintenance and another N1.6 trillion loss was incurred on the moribund assets which is managed by Nigerian National Petroleum Company Limited and have since been shut down while Nigeria spends billions of dollars importing white products amidst a bleeding economy.

The Senate insisted that it would get to the root of the wasteful spending along with another $592.9 million, €4.877 million and £3.456 million wasted on the assets in the last 13 years.

Coming days after the lawmakers started taking delivery of N160 million vehicles despite the hardship across the country, stakeholders in separate reactions told The Guardian that there are more important issues in the petroleum industry begging for attention that may collapse the economy.

Nigeria is currently struggling to meet crude oil production, gas projects are stalling due to last of feedstocks as Nigeria LNG Limited’s production is below capacity, deregulation of the downstream has been a mirage as subsidy payment returned on premium motor spirit while the aviation sector and manufacturers are shutting down factories due to high cost of diesel amidst rising crude oil vandalism and theft as well as cascading oil spill in the Niger Delta region.

Human and Environmental Development Agenda (HEDA Resource Centre) insisted that the investigation by Nigeria’s parliament is simply an extortion opportunity or a means of getting a share of the cake.

Chairman of HEDA, Olarewaju Suraju said the legislators, usually after the hearings, shy away from recommending the perpetrators of the crimes or corruption for further investigation or prosecution by the law enforcement agencies.

“Though they have the power to also recommend sanctions, it is only in circumstances where the subject of investigation fails to “play ball” that you hear of recommendations for sanctions. The recent House of Representatives’ investigation on federal character observance in public employment and the extortion associated with the committee members and the university vice-chancellors is an example.

“The Parliamentarians only, considering their treatments of the outcomes, embarked upon wasting of the nation’s resources to raise their negotiating powers and line their pockets,” Suraju alleged.

Suraju noted that there is always a silver lining for the media and civil society in the conspiracy and compromised hearings.

He however said revelations from the hearings could be useful information for materials in investigative journalism and petitions to appropriate law enforcement agencies.

In 2020, Senator Yusuf Yusuf, had moved a motion which led the Nigerian Senate to agree to probe the NNPC over the $396m spent on turn-around maintenance of the refineries in the country between 2013 and 2015. The senate committees on petroleum, downstream, upstream, and gas carried out the investigation on the expenditure incurred by the nation within the period but the outcome of the investigation remained in the drain.

The Guardian gathered that most of the probes in the oil sector at the National Assembly are money-making ventures for the lawmakers, who spend budgetary resources in conducting the investigation or being funded by the same oil companies they are investigating. The payback for some of them come as oversea trips and workshops sponsored by the oil companies they are threatening in the public.

Recall that a federal capital territory (FCT) high court sitting in Apo had sentenced Farouk Lawan, former chairman of the federal house of representatives ad-hoc committee on fuel subsidy, to seven years imprisonment over the $3 million bribery charges preferred against him by the federal government.

Renowned energy economist, Ademola Adigun described the investigation as a waste of time.

Adigun said: “The refineries should have been sold years ago. These investigations are more of a waste of time. That energy should be poured into proper deregulation of the downstream.”

An oil and gas lawyer and the Managing Partner, The Chancery Associates Emeka Okwuosa, said “it is an effort in futility.”

Asking that the refineries should be privatised, Okwuosa said the trillions being spent on projects that don’t work happened on the watch of some lawmakers.

“I am of the opinion that the refineries should be privatised instead of wasting humongous trillions of taxpayers money on waste projects. What we need is “proactive oversight” wherein accountability is targeted before the money is even appropriated and or expended,” he said.

Founder of Mudiame University and Managing Director of Mudiame University, Prof. Sunny Eromosele said series of reports and investigations by the Senate only end in the trash.

He disclosed that the lawmakers are on the same page with the people they are trying to investigate, stressing, “I don’t believe any serious revelation will add up to government actions.”

Eromosele said there is a need to assess the current status of the refinery and the current work being done to overhaul the assets.

“Two bodies are handling the turnaround now.  A consultant and NNPC. What are they going to achieve?”

Director, Centre for Transparency, Faith Nwadishi said the credibility of the exercise could be enhanced by bringing in independent, auditing bodies not politically affiliated, stressing that their detachment from local politics might provide a clearer perspective.

“There’s no denying the fact that previous Senate have trodden this path, spending sizable amounts on investigative committees that often ended in little concrete action. Yet, to dismiss this current endeavor based solely on previous disappointments would be premature. Every fresh attempt carries the promise of new revelations, particularly if approached with renewed vigor, commitment and methodologies,” she said.

Nwadishi said beyond numbers and statistics, the voices of civil society organizations, industry experts, and the everyday Nigerian should be woven into the narrative, adding that their insights and experiences could offer invaluable context.

“We are watching the Senate’s next steps with hope that after the investigation, they will share findings with us,” Nwadishi said.

Nigeria has three refineries located in Kaduna, Port Harcourt and Warri. These assets’ installed capacity of 445, 000 bpd plummeted over the years until the facility got obsolete and currently processes zero crude, while recording massive losses.

Buried in corruption with a series of probes at the National Assembly indicting public officials for misappropriating funds meant for TAM, documents on the financial details of previous maintenance exercises, especially since the military regime have been scanty.

The Guardian had reported that despite being shut down, NNPC may have left over N136 billion as operational deficits across its three refineries in Kaduna, Port Harcourt and Warri. On average, NNPC was spending about N68 billion in paying salaries and other expenses at the moribund refineries, yearly. In about two years, the losses had amounted to an average of N136 billion.

Senator Isah Jibrin Echocho is currently the chairman of the committee in the fresh investigation.

Meanwhile, amidst challenges facing local oil refiners in getting crude oil feedstocks, the Federal Government through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said defaulting oil companies would now pay a fine of $10,000, a penalty of 50 per cent of the fiscal price per barrel not delivered and denial of export permits.

With all functioning modular refineries in the country not producing to full capacity while Dangote Refinery is currently importing crude, the Chairman of Crude Oil Refineries Owners Association of Nigeria (CORAN), Momoh Oyarekhua had insisted that crude oil obligations required for the production of refined petroleum products by modular refineries are not being met.

This development is a direct opposite of the provision of section 109 of the Petroleum Industry Act (PIA) 2021 which introduced the Domestic Crude Supply Obligation (DCSO) to Nigeria’s oil industry in a bid to ensure that domestic refineries are not starved of crude oil supply for their operation.

Head, Public Affairs and Corporate Communications, Olaide Shonola in a release at the weekend said more private refineries have indicated readiness to commence production soon in Nigeria as the commission is taking all necessary steps within the prescriptions of the Petroleum Industry Act (2021) to ensure adequate and consistent supply of feedstock to operators.

Shonola said there would be consequences for sabotaging the process if oil companies fail to meet the obligations.

“The pre-emptive steps are being taken because it would send wrong and unbecoming signals to the international business community if operators of domestic refineries in one of the world’s largest crude oil-producing countries start importing feedstock for their production,” she said.

Shonola said where there is a reported crude supply shortage from the NMDPRA, the Commission is under obligation to issue a Request for Quotation (RFQ) to producers asking for submission of quotation for bridging the shortfall, whereupon the Commission would contact affected refineries to facilitate contract negotiations between the stakeholders.

Failure to meet the terms would, according to her, attract from the Commission an obligation on the oil producers to supply the required volumes and notify the Authority accordingly.

Shonola said all the 52 exploration and production companies have been invited to a meeting on November 1, 2023, for alignment on the implementation of domestic crude oil supply obligation, operator’s compliance status and operator’s response.