TWO refineries in Port Harcourt, one in Warri and another in Kaduna owed the Nigerian National Petroleum Corporation (NNPC) a total sum of N4.498 trillion by the end of 2023 without producing oil, according to the 2023 full year financial statement released recently by the national oil company.
According to the NNPC financials, Port Harcourt Refining Company Limited was indebted to the NNPC to the tune of N1.97 trillion by the end of 2023, while Kaduna Refining and Petrochemical Company Limited owed its parent company N1.356 trillion. Similarly, Warri Refining and Petrochemical Company Limited owed the NNPC the sum of N1.171 trillion by the end of last year.
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The total amount of money owed the NNPC by all of its 30 subsidiaries and joint venture (JV) partners stood at N22.048 trillion. This was a significant debt increase when compared with what was owed by these subsidiaries and the partners at December 2022.
As at December 2022, the NNPC subsidiaries and other related parties owed the national oil company N8.671 trillion. In one year, however, the debts owed by these entities jumped by 154.27 percent to N22.048 trillion.
Moribund refineries sink Nigeria’s funds
Nigeria’s refineries have guzzled Nigeria’s trillions of naira with little or no output.
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Between 2017 and 2020, Port Harcourt refinery incurred N241.609 billion in comprehensive losses, while its revenue merely stood at N6.27 billion. Despite not making revenues in 2020, the NNPC-owned refinery employed 487 new staff and paid N23 billion in salary without producing oil.
In 2019, the refinery recorded zero revenues but reported N25.19 billion in expenses. It also paid N22.195 billion in salaries, allowances, pensions and allowances.
Similarly, Kaduna refinery’s revenues stood at N2.278 billion between 2017 and 2019 but losses were estimated at N241.527 billion. In 2018, the refinery made no profits but spent N317.50 billion on transport and travels. From 2017 to 2019, Kaduna refinery spent N443.421 billion on transport and travels.
The story is the same for Warri refinery, which incurred comprehensive losses totalling N188.436 billion between 2019 and 2019. Despte these poor financial results, Warri refinery directors raised their earnings from N270.090 million in 2018 to N332.137 million in 2019, having pocketed N353.019 million as remuneration in 2017.
Economy Post had earlier reported that the NNPC spent N16.7 trillion (approximately N17 trillion) on the turnaround maintenance of the nation’s three refineries between 2002 and 2022.
Money, money and more money
The NNPC is rehabilitating the four refineries at the moment. About $1.5 billion is being spent on Port Harcourt refinery rehabiltation, while $897 million is being expended on Warri refinery rejig. Similarly, $586 million is being expended on Kaduna refinery rehab.
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According to Founder of Stanbic IBTC, Mr Atedo Peterside,”Instead of ending this nightmare through a BPE core investor sale, the NNPC wants to enmesh Nigeria into a deeper financial mess.”
NNPC to hand over refineries to private operators
After dilly-dallying for many years, the NNPC said on Friday, August 30, that it was seeking to engage reputable and credible operations and maintenance companies to run Warri and Kaduna refineries.
“The O&M contract scope of work shall cover, but not be limited to, the following: long-term and short-term production/operations planning; Production and operations execution; Monitoring, reporting and optimization of operations; Maintenance planning (short-term); and maintenance execution,” the NNPC said.
A Lagos-based economist, Mr Ozie Ahigbe, described the decision by the NNPC as apt and timely but knocked the oil company for wasting Nigeria’s time for many years.
“What the NNPC has done now should have been done 15 years ago. Had this happened 15 or 20 years ago, they would have saved Nigeria of several trillions of naira and the nation would have moved on by now.
“More still, things would have stabilised in that segment of the market. It is just a total waste of time to allow these refineries to remain in the hands of the government. Why should they be spending $1.5 billion on Port Harcourt refinery? Why must they be spending another $1.5 billion on Kaduna and Warri refineries when they knew these entities would still be privatised at the end? Why not hand over these refineries from the outset and save the nation of this total waste of money?” he asked.
