The Buhari APC government has since coming to power spent $26.5 billion on maintenance of Nigeria’s oil refineries alone.
Oil experts and industry watchers have estimated that it would cost less ($24 billion) to build the same three refineries with same refining capacity at Port Harcourt, Warri, and Kaduna today.
They wondered why this government is not prudent with scarce resources by going ahead to do turn around maintenance with funds that could have built a new set of refineries.
IN THE BEGINNING
The discovery of oil (Black Gold) on January 1956 at Oloibiri in Ogbia LGA of Bayelsa state, and subsequently many others in several Clcommunities in the Niger Delta of Nigeria.
Following the increase in oil wells, Nigeria embarked on the construction of these refineries by the Yakubu Gowon led administration:
Port Harcourt refinery commissioned in 1965 with a refining capacity of 210, 000 barrels per day of oil and gas. Warri refinery commissioned in 1978 and the commissioning of the Petro Chemical plant in 1987 with a total refining capacity of 125, 000 barrels per day.
Kaduna refinery commissioned in 1988 with a total refining capacity of 110, 000 barrels per day for oil and gas. It was also built to produce lubricating oil blend stocks, waxes, bitumen and Kero.
These refineries launched Nigeria to the elite club of world oil producing nations, and the organization of Oil Producing and Exporting Countries (OPEC).
OIL SUBSIDY : FACTS OF THE SCAM
Nigeria is the 7th highest oil producer in the world, and Africa’s biggest.
Despite oil being the country’s economic mainstay since the 1970’s, contemporary successive governments have failed to maintain the refining of crude oil in our refineries.
These seeming apathy had resulted in the abandoning of such critical assets leading to endless importation, rising prices of premium spirit, diesel, gas, jet A (Aviation) fuel, bitumen, kero, etc.
Nigeria is a country that produces crude oil but imports refined products for domestic consumption. This no doubt has given rise to monumental corruption.
How much petroleum products is imported? How much liters is consumed?
These are some of the questions NNPC and government is unable to provide answers to.
Funds are always released for turnaround maintenance (TAM) of the countries’ three (3) refineries at Port Harcourt, Warri, and Kaduna but the more money is sunk, the less of oil drop is seen by Nigerians. These refineries have become more of cash cows for government officials than avenues for national development.
For a government of the APC that promises to build four new refineries in four years to resort to spending a whopping $26.5 billion on endless maintenance of rusted out infrastructure called refineries smacks of corruption.
Therefore, Petroleum products have continued to be subsidized.
Unfortunately, due to the rising price of crude oil in the international market, and the falling value of the naira, petroleum subsidy payment grew from # 350 billion in 2019 to # 450 billion in 2020, then got to # 1.573 billion in 2022.
What baffle keen observers of the sharp rising trend of this subsidy regime is the figures spent for 2022. Data from the Nigerian National Petroleum Corporation (NNPC) shows that for January and February 2022 alone, the cost for subsidy was #396.72 billion.
Furthermore, the federal legislatures approved another sum of #4 trillion to be spent on subsidy in 2022.
This #4 trillion approval to be spent for subsidy in 2022 means that the federal government has abandoned its enacted Petroleum Industry Act of 2021 that prescribed a free market for the downstream sector of the petroleum industry.
According to the minister of finance, budget & national planning, Zainab Ahmed, in July 2022, the country will be expected to pay as much as #6.72 trillion for subsidy in 2023.
This is the danger:
(1) This portends trouble economically if this subsidy regime continuous.
(2) How will Nigeria with a total annual budget of #17 trillion use a whopping #4 trillion for subsidy alone?
(3) How will Nigeria cope with a projected revenue of #10 trillion?
(4) Oil prices are surging upwards globally due to the Russian War in Ukraine. Nigeria is unable to take advantage of this global oil boom in price because we don’t refine.
Surely the subsidy will have to get higher as Nigeria is at the mercy of rising market forces. Will things not get much more difficult for Nigeria in the very near future?
PETROLEUM CORRUPTION SCANDALS UNDER APC/BUHARI’S WATCH
You would recall that APC under Buhari had promised Nigerians before the 2015 elections that they will build four new refineries in four years of their reign if elected to power. The APC was elected in 2015 and we are eight years going without APC government building any new refinery. They cannot even maintain the existing ones, thus subjecting Nigerians to excruciating agony of high prices and shortages.
As we speak, Nigeria cannot even mine its crude for export to meet the approved 1.8 billion barrels per day OPEC quota.
Surprisingly, Major General Muhammadu Buhari was the petroleum minister during the military administration of General Olushegun Matthew Aremu Obasanjo. Today, President Muhammadu Buhari doubles as the minister of petroleum.
Therefore, the alleged monumental corruption in the oil sector can rightly be placed at Buhari’s door step. The APC government under Buhari’s watch reportedly spent #10.23 billion in June 2020 on three (3) refineries that ended up processing zero crude.
Again in 2021, this APC government approved and is spending $1.5 billion (about #600 billion) to repair the Port Harcourt refinery. Despite the huge spending, the refineries have refused to function, while Nigerians keep groaning under the excruciating and persistent scarcity.
Interestingly, SERAP in a suit number FHC/L/CS/806/2022 filed in the Federal High Court, Lagos, is seeking an order of Mandamus to compel Muhammadu Buhari to investigate the spending of #1.48 trillion reportedly spent on four refineries between 2015 and 2020 (NNPC Monthly Financial Statement).
One may ask, which is the 4th refinery referenced here?
MORE SCANDALOUS REVELATION
In another major revelation twist, petroleum industry watchers lament the whopping sum of $26.5 billion which the federal government has so far spent on the maintenance of the country’s loss – making 445,000 barrels per day capacity three (3) refineries of Port Harcourt, Warri, and Kaduna.
Experts on energy and construction of refineries have opined openly to say that this $26.5 billion is capable of building three new refineries of the same sizes as each of the ones in Port Harcourt, Warri and Kaduna.
This suggestion, according to these experts, is arrived at based on the cost analysis of refinery projects currently going on across the world :
(1) The Ecuador refinery being constructed at Manto is a 500,000 barrels per day capacity for $12 billion.
(2) Dangote refinery in Lagos, Nigeria, a 650,000 barrels per day capacity being constructed for about $15 billion.
(3) Kuwait is building the Al Zour Oil Refinery for $16 billion with a refining capacity for 615 barrels per day.
Now, with Nigeria’s three (3) refineries having a combined refining capacity of 445,000 barrels per day, the implication is that it would cost less than:
(a) $8 billion to build a new 210,000 barrels per day capacity refinery in Port Harcourt – the same size like the existing one.
(b) It will also cost less than $8 billion to build a new refinery in Warri, just like the existing one with same refining capacity of 125,000 barrels per day.
(c) The Kaduna refinery has a refining capacity of 110,000 barrels per day. If an exact and similar refinery were to be built today in Kaduna, it will cost less than $8 billion. By the above expert’s analysis, the three new refineries would therefore cost only about $24 billion.
The questions to ask the APC and Muhammadu Buhari government include the following:
(1) Why did the government of APC spent a whopping sum $26.5 billion on maintenance of refineries without a single drop of oil?
(2) Did Buhari’s petroleum minister experience during the Obasanjo military rule and his present petroleum minister status go without managerial capabilities?
(3) Who will account for these monumental wastages to Nigerians?
(4) What will APC boast to have achieved in its eight years of governance of a Nigeria with 200 million suffering people?