After years of doubtful turnaround maintenance of our moribund refineries, the Senate has finally decided to probe the seemingly fraudulent exercise. The Red Chamber has set up an ad hoc committee to investigate all the contracts awarded for the rehabilitation of all state-owned refineries in the past 13 years. According to estimates, the maintenance of the nation’s four refineries has gulped N11.35trillion from 2010 to 2023.
The committee will also to liaise with the Ministry of Petroleum Resources, the Nigerian Upstream Petroleum Regulatory Commission, Nigerian National Petroleum Corporation Limited and the Bureau of Public Enterprises to come up with the best approach to commercialise state-owned refineries. The panel is headed by Senator Isah Jibrin Echocho. Other members are chairmen of the Committees on Petroleum Resources (Downstream, Upstream and Gas), Finance, Appropriation, and Public Accounts. They are expected to submit their report within four weeks.
Without doubt, Nigeria’s four refineries located in Kaduna, Warri and Port Harcourt had become moribund for years despite the periodic and wasteful turnaround maintenance exercise.
Senator Sunday Karimi (APC, Kogi West), who prompted the action, disclosed that since 2010, Nigeria has spent N11.35 trillion (excluding other costs in other currencies, which include $592, 976, 050, €4, 877, 068.47 and £3, 455, 656.93) on the renovation of the refineries. The senator also observed that despite the dilapidated state of the four refineries, their operating costs between 2010 and 2020 were estimated at N4.8 trillion. The refineries recorded a loss of N1.64 trillion within the last four years.
Despite the huge money expended in these periodic maintenance exercises, the nation’s refineries have remained unproductive, forcing the country to depend so much on imported petroleum products at exorbitant rates. The reliance on imported fuel and other petroleum products on account of fraudulent subsidy payments is responsible for the poor state of our refineries and our inability to build new ones.
There must be an end to this culture of profligacy in the oil sector. Therefore, we commend the Senate for the bold initiative to investigate the financial sleaze in the bogus turnaround maintenance of our refineries. It is incontestable that the money spent on the turnaround maintenance of the refineries can build many new ones.
We welcome the probe and urge members of the committee to thoroughly investigate all contracts awarded so far for the turnaround maintenance. Those found to have been involved in sharp practices in the award of the contracts or shoddy maintenance of the refineries should be duly sanctioned. The committee must come up with recommendations on how best to put the refineries to optimum use. There must be an end to the era of fraudulent turnaround maintenance of the refineries.
Without preempting the recommendations of the committee, the government should consider outright selling of the moribund refineries and build new ones or maintain them at minimal cost and still build new ones. While building gigantic refineries is not a bad idea, we believe that building medium and small refineries will be more pragmatic and cost effective. Building modular refineries can also be helpful.
There should be no cover-up in the investigations by the committee. The findings of the committee should be made public. Let this not go the way of other forgotten probes in the sector. Nigeria cannot afford to continue to spend so much money on unproductive refineries and empowering a few corrupt ones in the society. Let those responsible for the present piteous state of the refineries be sanctioned accordingly. It is needless to pump money into the rehabilitation of the refineries annually when they are not functional.
As a major oil-producing country, there is no justification for the high cost of petroleum products in Nigeria.
Instead of spending so much money on the annual ritual of turnaround maintenance of the refineries, let the government build new ones and give licence to companies to build refineries in every oil-producing state. Having more functional refineries will end the endemic corruption in the annual turnaround maintenance of the nation’s four moribund refineries.