Oil industry sources over
the weekend made startling disclosures of how top industry officials ruined
Nigeria's four refineries by diverting huge funds earmarked for their routine
comprehensive turnaround maintenance (TAM).
The four refineries located
in Port Harcourt (two), Warri and Kaduna have a combined installed capacity to
refine 445,000 barrels of crude per day, but have over the years performed
abysmally owing to the obsolete state of the facilities.
THISDAY gathered that in 2014,
the combined average refining capacity utilisation dropped to 14.4 per cent
from 22 per cent in 2013. In 2015, the combined refining capacity utilisation
declined further to 4.9 per cent against 14.4 per cent in the previous year.
Three of the refineries could only produce at averaged combined capacity
utilisation of between 12.73 per cent and 23.09 per cent.
Minister of State for
Petroleum, Dr. Ibe Kachikwu disclosed in February that collectively, all the
four refineries are producing at 14 per cent capacity utilisation.
Oil industry sources
familiar with operations of the refineries, told THISDAY that contrary to
repeated claims by the Nigerian National Petroleum Corporation (NNPC) that the
refineries undergo routine TAM, the four refineries might not have undergone
comprehensive repairs in the last 18 years or more as contracts awarded by
successive governments were either abandoned halfway or not executed at all.
Whereas the NNPC disclosed
last week that it spent $396.33million on TAM for the four refineries between
1998 and 2008, an oil industry source stated that the last two comprehensive
TAMs of the refineries were in 1995 and 2000.
According to the source,
despite the billions of dollars, which the NNPC claimed were expended on the
Port Harcourt refinery upgrade, the power unit, said to be among its vital
units were neglected, culminating in the massive damage to the fluid catalytic
unit, which is responsible for conversion processes used in petroleum refining.
According to checks,
failures by successive governments to carry out routine TAM of the refineries
resulted in the colossal damage to their vital units.
For instance, the two TAMs
slated for the four refineries in 1998 were not carried out despite that the
firms engaged in the purported exercise were paid millions of dollars.
Also, between 1999 and
2013, billions of dollars were reportedly voted for the refineries upgrades
and/or TAMs, but there was little or no repairs carried out on them.
A former Minister of
Petroleum, Mrs. Diezani Alison -Madueke had after a tour of the refineries,
shortly after she assumed office, confirmed that "all the vital units of
the refineries were obsolete and could no longer produce owing to years of
neglect."
Describing the refineries
as 'ATMs' for successive administrations, a highly placed industry source said
attempts to privatise the refineries had been frustrated by those who feed fat
from them.
"What has happened
over the years was that the authorities set up shell firms that win contracts
for the repairs that were never carried out at the end of the day. The huge
funds are often used for election purposes", said the source.
In 2014, it was gathered
that about $1.8billion was voted for TAM of the four plants, but there was no
indication that the money was utilised for that purpose as all the refineries
have remained comatose.
A source added: "All
the claims in the past that the refineries were producing were false. If you
were following the trend, once the NNPC announces TAM on the refineries, it
would be followed by announcement on when the repair would be concluded and
what the refineries are producing. In fact at some point, the corporation will
announce the production capacity, 60 or even 90 per cent. The next thing is to
set the target when the country will end importation. All these were aimed to
deceive Nigerians that the money earmarked for the repairs had been utilised
for the purpose.
"After the TAM that
never happened, the next announcement would be attack by vandals. They will
claim that the refineries have stopped producing as a result of the attack. The
next thing is to award another contract for TAM and billions of dollars would
be released for upgrades and TAM that never happen", added the source.
He noted that the NNPC
often kept the identities of contractors secret because the deals were
fraudulent.
"A recent case in
point was how a Nigerian firm, a few years' ago, inflated the contract for the
repairs of the old and new Port-Harcourt refineries. At the end of the day, the
country was ripped off to the tune of about $150 million being inflated
payments on the contract", another source recalled, even as he challenged
the NNPC management to make open to Nigerians, the identities of the
contractors that carried out the series of repairs, the amounts, dates of the
repairs as well as schedule of the various maintenance carried out.
The NNPC in 2014 claimed it
adopted phased rehabilitation of the plants after efforts in 2011 to get the
original refinery builders (ORB) involved in their rehabilitation came up with
unfavorable terms.
Kachikwu, had shortly after
assuming office, declared that about $1.2 billion was required to repair and
bring the three refineries in Port Harcourt, Warri, and Kaduna, up to 100 per
cent production level.
He said the government was
yet to get financiers to take this up and not concession the refineries as
previously reported.
Kachikwu also revealed that
the government had renewed plan to invite the original refineries builders
(ORB) for the three refineries to undertake their repairs.
The minister also stated
then that there was a consensus within the government that the refineries ORBs
which are Saipem in Warri; JGC in Port Harcourt; and Chiyoda in Kaduna, would
be invited to undertake the repairs considering that they have a better
knowledge of the refineries.
Addressing the House of
Representatives' Ad-hoc Committee investigating the status of the nation's four
refineries, last week, Chief Operating Officer in charge of Refineries, at the
NNPC, Anibor Kragha, disclosed that the corporation spent $396.33million on TAM
for the four refineries between 1998 and 2008 alone.
According to a breakdown of
the expenses by the NNPC, a total sum of $182.730 million were proposed for old
and new Port Harcourt refineries, for which it claimed $157.641 million was
spent, while $151.170 million was spent on Warri refinery. The NNPC further
noted that of the $91.5 million proposed for the Kaduna Refinery, $87.517
million was spent.
In the TAM record provided,
the corporation did not reveal the cost of the TAM carried out during the last
administration and also failed to give details about the firms that carried out
the said TAM.
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