Nigeria's 3 refineries gulp ₦11 trillion in 13 years as rehabilitation costs
A report by the House of Representatives ad-hoc committee on the state of refineries in Nigeria has revealed the FG spent ₦11.34 trillion for the rehabilitation of three refineries between 2010 and 2020.
Nigeria's three refineries, located in Warri, Port Harcourt, and Kaduna have remained out of service for a while and have become a significant cause of concern in the fight for the growth of Nigeria’s oil industry.
When the total cost of individual refinery rehabilitation was compiled, it was shown that the cost of rehabilitating the Port Harcourt Refinery Company was only valued at about ₦12,161,237,811.61. This was done over a period of seven years - from 2013 to 2019.
The rehabilitation of the Warri Refinery and Petrochemical Company over a period of six years (from 2014 to 2019) was valued at about ₦28,219,110,067.10.
The Kaduna Refinery and Petrochemical Company also carried out rehabilitation works over the period and the cost was pegged at about ₦2,266,248,434.69.
Based on this report, the cost of rehabilitating the three refineries from 2013 to 2019 was valued at ₦42,646,596,313.40 only.
The report also revealed that in the 2020, 2021 and 2022 fiscal framework, there were approvals from the National Assembly for rehabilitating the refineries to the tune of ₦100 billion, ₦100 billion and ₦109.326 billion respectively.
From the report, the committee confirmed that all three refineries stopped functioning in 2010 thus incurring losses to the FG.
The Port Harcourt refinery was the first to break down in 2012. It thereafter incurred a 7.6% loss to the tune of ₦132,526 billion; Warri refinery was next to stop operations in 2014 with a 6% loss to the tune of ₦111.376 billion while the Kaduna refinery ended operations in 2014 incurring a 10% loss to the tune of ₦122,621 billion.
The refineries’ performance from 2010 to 2019, was labelled sub-optimal with a combined annual capacity of less than 30%.
The low output from the refineries prompted the Nigerian National Petroleum Company Limited, NNPCL, to obtain executive approval in 2019 to shut down the refineries with a plan to rehabilitate them and restore the facilities to optimize production capacity.
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