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NNPC Expends N83.33bn on Dormant Refineries in 10 Months, Exceeds Pipeline Security Costs by N18bn


The Nigerian National Petroleum Company (NNPC) Limited, spent N83.33 billion on the country’s non-functional petroleum refineries in the first 10 months of 2021, according to latest data from the national oil company.

Documents from the NNPC on its November operations further revealed that the company had so far exceeded its budget for the security and maintenance of its pipelines by N18.025 billion as of October this year.

The data on the company’s performance from January to October indicated that beside petrol subsidy, the expense on the dormant refineries is one of the few cost centres that will be almost fully funded by the end of the year from the NNPC’s budgetary projections for the year.

Coming under the subheading “refinery rehabilitation”, the figures showed that while a total of N100 billion was budgeted by the company for the entire 2021, as of October it had released N83.33 billion for the purpose.
A breakdown revealed that N8.333 billion was forecast as monthly spending for the purpose, which the company had faithfully executed for the year. Going by the trend, the NNPC spending on “refinery rehabilitation” will hit N99.996 billion by the end of this year.

Although they have not produced a drop of fuel in the last couple of years, Nigeria’s four refineries located in Kaduna, Delta and Rivers states, have been major cost centres for the national oil firm.
The Port Harcourt Refining Company (PHRC) is made up of two refineries located at Alesa-Eleme, Rivers State and commissioned in 1965 and 1989 respectively.

While the older refinery has a refining nameplate capacity of 60,000 barrels per day, the other has refining capacity of 150, 000 barrels per day, that’s about 210,000 barrels total refining capability or day.
On the other hand, the Kaduna Refinery and Petrochemical Company (KRPC) is located in Kaduna state, with a nameplate refining capacity of 110, 000 bpd, while the Warri Refinery and Petrochemical Company (WRPC) is located in Warri, with a capacity to refine 125,000 barrels a day.

In trying to defend the monthly spending, despite the non-functional state of the refineries, Minister of State, Petroleum Resources, recently insisted that the NNPC had continued to pay salaries despite not producing any fuel from the facilities.

He noted that while the government shares part of the blame, the unions which have maintained that nobody should be sacked in the dormant refineries, also contributed in running down the assets.
“We have a situation now of a refinery that has not functioned for three years, yet it’s paying salaries. Every staff is being paid. The refineries haven’t worked for three years. We have carried on paying salaries. Nobody can sack anybody.

“People are getting promoted, but the refineries are not functioning. Unions will not let you. Those are the real issues. A few days ago, the GMD (Mele Kyari) just threatened to lay off some contract staff in Kaduna refinery, which has not functioned for three years and the unions wrote to me that they heard that their members were to be sacked and gave threats.

“The unions and their members were the ones managing the refineries. Yes, I know government is to blame. I am not absolving government completely, but they themselves are part of the blame game. They were managing it,” he contended.

Furthermore, in the latest report the NNPC data showed that in the first 10 months of the year, its projected budget for pipeline security and maintenance cost of 29.68 billion had been exceeded.
Whereas of the N29.68 billion, N24.724 billion was supposed to have been spent from January to October, the NNPC had spent N42.760 billion within the period under review.

With a hitherto monthly provision of N2.474 billion, the data further revealed that the budget had been consistently surpassed, although other major projects continue to suffer underfunding.
In February, the NNPC spent N5.813 billion for the purpose; in March it was N5.320 billion; in April, N2.641 billion was expended while in May, the national oil company financed security of the pipelines to the tune of N5.258 billion.

In addition, the company spent N6.174 billion for maintaining its pipelines in June; a whopping N7.352 billion in July; N2.301 billion in September and N7.901 billion in October.

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