Reps’ fresh inquest into state of Nigeria’s petroleum refineries



In the wake of yet, another controversy surrounding the payment of subsidy on Premium Motor Spirit (PMS) popularly known as petrol, the House of Representatives embarked on a mission to determine the current state of the federal government’s-owned refineries. JOSHUA EGBODO examines the issues involved.

How it started

Like the usual pattern it normally takes, the rumour mill churned out reports when 2021 was winding down, that beginning from early part of the coming year, subsidy on petrol would be fully removed. This led to agitations, as marketers of the essential product as has been a long time practice reverted to hoarding in anticipation of the hike in pump price.

Nigerians across the country were in the later weeks forced to sleep on long cues in service stations, abandon use of their vehicles, as well as forced to pay through their noses, unbearable transportation fares while the scarcity continued to bite harder daily.

Organised labour, others up in arms

In no strange manner of response, according to many analysts, the organised labour in the country and civil society organisations issued threats on moves that could shut down the already terribly feeble economic state of Nigeria. A nationwide protest was announced by labour and support groups, leaving the entire nation in panic.

The backtrack

The federal government in reaction, and after the National Assembly intervened, made a retreat, explaining that the planned subsidy removal would not be coming anytime soon as rumoured.

Minister of Finance, Budget and National Planning, Zainab Ahmed, at a meeting in late January, which the Senate President, Ahmad Lawan personally superintended over, with labour and other critical stakeholders in attendance, explained that the federal government has suspended removal of petrol subsidy.

According to her, the government had made provisions for subsidy in the 2022 budget from January to June, with a promise that government will forward a request to the parliament to make additional provisions for fuel subsidy from July this year till a time deemed appropriate for its final removal.

Reps’ special move

Back in session after the yuletide break, the House of Representatives, after a motion raising concerns on the agitation of the organised labour and the potential effect on the economy opted to find out some pertinent issues.

Speaker of the House, Femi Gbajabiamila, in the aftermath of adopting the motion set up separate committees to verify amongst other things, the actual amount of daily petrol consumption in Nigeria, and the current state of the petroleum refineries, how much money had been expended and what may be needed to bring them back to optimal production capacity.

Similar past probe

When the speaker announced the constitution of the committees, industry followers were quick to recall that one of the deepest probe as contained in the terms of references of the new panels had been during the 7th House of Representatives, when it called off its break to sit on a Sunday evening to address an energy crisis occasioned by government’s sudden decision to remove petrol subsidy.

Understandably advised by the then Minister of Finance, Dr. Ngozi Okonjo-Iweala who was coordinating the nation’s economic policies, former President Goodluck Jonathan announced the drastic withdrawal of petrol subsidy, when records before the government was showing over a trillion naira debt burden against it, and at a time when the budget deficit was standing at about the same figure. The worry then was how the government could fund such a debt burden.

The reaction, whether spontaneous or politically motivated as many pundits later viewed it, saw the country almost grounded economically. When the House of Representatives ended its special sitting with Aminu Waziri Tambuwal as Speaker then, the subsidy probe panel, headed by Farouk Lawan was constituted.

Though the Lawan’s panel probe ingloriously ended with the bribery allegation by oil mogul, Femi Otedola against the committee chairman, one big lesson in the thinking of followers of the issues was learnt by the Jonathan’s led government; that the figures being bandied around as the daily petrol consumption rate for the country were fabrications. The government after cutting down the quota by about 50 percent was to later see steady supply across the county. It was seen as a proof then that there were “portfolio bags impoters” as alleged by experts, benefiting unmerited subsidy payments from the government.

The case of round tripping was also established, when stakeholders pointed out the fraud of importers taking back loaded and already documented vessels into the high sea, and returning same the following morning as freshly arriving cargo. This was later to get some persons prosecuted.

The fresh probe

The committee of House of Representatives saddled with the mandate of determining the current state of the nation’s refineries, headed by Hon. Ganiyu Johnson expressed its disappointment last week, when for a second time, invited Minister of State for Petroleum Resources, Timipre Sylva, Group Managing Director of NNPC Limited, Mele Kyari and General Managers of the refineries failed to turn up for a scheduled engagement.

“You may all recall that the Speaker of the House of Representatives, Rt. Honourable Femi Gbajabiamila in January, 2022 constituted this Committee to determine actual cost of rehabilitating the refineries and what is needed to bring them back to maximum refining capacity.

“The Committee was mandated to determine the true state of the Refineries, ascertain the actual cost of rehabilitating the refineries and what is needed for the refineries to function at maximum refining capacity”, the panel’s chairman told journalists last week, and insisted that the committee may be forced to issue compelling appearance warrant if the concerned persons failed to honour its summon again.

The questionable $3.7 billion maintenance expenditure

Many Nigerians have expressed surprises over revelations that $3.7 billion has been spent for the maintenance of the refineries, and yet, the country still import petroleum products. Chairman of the investigating committee, Hon. Johnson disclosed that information available before the panel suggested that $900 Million has been expended on the rehabilitation of the Warri Refinery and Petrochemical Company, $1.5 billion on the Port Harcourt Refinery and Petrochemical Comapny, and $1.3 billion on the Kaduna Refinery and Petrochemical Company, with all works certified as “completed”.

The situation left many, including the committee with the unanswered question of why we are where we are after such huge expenditure.

What the panel wanted

The Committee has lined out what it wanted as information from the NNPC Limited, under which supervision are the refineries. It said it specifically requested the GMD to provide; Appraisal of the current state of refineries in the Country: Port Harcourt Refining Company (PHRC); Warri Refining and Petrochemical Company Limited (WRPC) and Kaduna Refining and Petrochemical Company Limited (KRPC) from year 2012 to date.

Copies of annual budgets on rehabilitation by the refineries: Port Harcourt Refining Company (PHRC); Warri Refining and Petrochemical Company Limited (WRPC) and Kaduna Refining and Petrochemical Company Limited (KRPC)) from year 2012 to date, list of approvals/fund releases for rehabilitation of refineries from year 2012 to date, and list ofall Contracts awarded for rehabilitation of refineries and avard letters issued to service providers and contractors from year voi to date.

Others include information on Actual Cost of Projects (Contracts) and Review (if any) stated in Naira, work Completion Certificates issued on rehabilitation projects carried out on refineries from year 2012 to date, evidence of payments made for all such contracts awarded from year 2012 to date, list of service providers and contractors that handled the rehabilitation of refineries from year 2012 to date, and any other relevant information to assist the Committee in the course of its assignment.

How far can it go?

Worries have already been expressed by analysts that nobble as the move appeared, there may be obstacles the panel may not be able to scale, this they banked on past experiences, especially when such probes relate to the oil sector.

“As members of the National Assembly and representatives of the people, we have the constitutional duty to name and demand from those responsible; the Hon. Minister of State for Petroleum Resources, the GMD of NNPC and the operators of the refineries to let us know the problems besetting our refineries in order to proffer solutions for a sustainable future and for the benefit of all Nigerians”, the committee hard summed up his briefing last week, but pundits are yet pessimistic on readiness of those concerned to honour the call.