PRESIDENT Bola Tinubu must commence the probe of the decades-long turnaround maintenance scams by successive administrations of the Nigerian National Petroleum Company Limited (NNPCL), formerly the Nigerian National Petroleum Corporation (NNPC), analysts say.

A turnaround – which is sometimes referred to as a TAR – is a highly-expensive planned period of regeneration in a plant or refinery. During this time, an entire part of the operation is offlined, while plants are inspected and revamped, according to the Oil and Gas IQ.

Turnaround maintenance has cost Nigeria trillions of naira. It cost Nigeria about N16.7 trillion between 2002 and 2022, according to Economy Post’s findings. Earlier in May 2023, the House of Representatives Ad Hoc Committee on the State of Refineries in the Country had revealed that the Nigerian government spent a total sum of N11.35 trillion on the rehabilitation of the three refineries from 2010 to 2023. In spite of the huge spend, the nation’s refineries are still not functioning.

Mele Kyari, ex-GMD, NNPC

The committee stated that the total cost of refineries’ rehabilitation within the period was N11.349 trillion, with additional costs in other currencies including $592.976 million, €4.877 million and £3.456 million. When the foreign exchange rates are converted into naira, the total amount is over N12 trillion.

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The committee’s report noted that the NNPC, in 2016, obtained a presidential approval for the $2.1 billion maintenance of refineries to be funded over a three-year period, The Punch reported.

The report added that the National Assembly approved N100 billion in 2020, N100 billion in 2021 and N109.326 billion in 2022 fiscal framework for the refineries’ maintenance.

Losses and more losses

The four refineries have wasted tax payers’ money without commensurate productivity. Between 2017 and 2021, the Port Harcourt Refining Company Limited lost N343.66 billion, while maintaining a staff strength of 506. The refinery engaged 487 new workers in 2020, paying them N3.93 billion annually, The ICIR reported.

By implication, each of the workers took home an average of N8.072 million annually or N672,713 monthly. On the other hand, Warri Refining and Petrochemical Company Limited incurred losses totalling N267.09 billion over the period, maintaining a staff strength of 331. Similarly, the 110,000-capacity Kaduna Refining and Petrochemical Company Limited incurred losses amounting to N320.19 billion, posting a staff strength of 525 within the same period.

Between 2017 and 2019, the Kaduna refinery generated revenue of N4.429 billion but incurred expenses of N144. 140 billion, according to Economy Post analysis of the company’s financial statements.

Who is benefitting from turnaround maintenance?

Several companies – local and foreign – have benefitted from the failed turnaround maintenance projects, which have plunged the refineries into bankruptcy.

One of the biggest beneficiaries of the turnaround maintenance is Mr Emeka Offor, whose Chrome Group handled most of the contracts for the turnaround maintenance of the Port Harcourt refinery under late General Sani Abacha.Emeka Offor

“I explained that what I met were refineries that were not working, refineries that were given to an amateur for repairs, for maintenance, what they call turn around maintenance to the company of Emeka Offor – Chrome Group,” Premium Times quoted former President Olusegun Obasanjo as saying.

It also quoted Obasanjo as saying in 2015 that nothing came out of the turnaround maintenance work done by the businessman.

“Where has Emeka Offor maintained refineries before? Where has he? That’s what we met. So, the refineries were not working. What can you recover? A man ‎ (Mr. Offor) who was paid upfront. He had people…. after I left he became friends with every government that has come. Now he’s not only into refinery and oil and all that, he’s now also in energy,” it further quoted Mr Obasanjo as saying.

In 2014, Offor also got a contract for a turnaround maintenance work from former President Goodluck Jonathan.
In year 2000, an Italian company, Comerint SPA, won a $7.6 million contract for turnaround maintenance of Warri refinery.

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In 2005 and 2013, Japan-based Chiyota, which is the original builder of Kaduna refinery, carried out turnaround maintenance services on the facility, according to Vanguard, but nothing changed.

In 2021, the Federal Government awarded a $1.5 billion controversial contract for the rehabilitation of Port Harcourt refinery to an Italian company, Tecnimont SPA.

Also, about $1.484 billion contracts were awarded to Saipem SPA and Saipem Contracting Limited for the rehabilitation of Kaduna and Warri refineries, reported The Cable.

Interestingly, most of the companies that have ruined Nigeria’s refineries are foreign firms with the so-called technical know-how. Under the ex-Group Managing Director, Mr Mele Kyari, the NNPC spent nearly $3 billion on the rehabilitation of Port Harcourt, Warri and Kaduna refineries. Mr Kyari was bent on ensuring that the refineries worked and competed with the then upcoming Dangote Petroleum Refinery, yet it did not work.

Calls for probe

An oil and gas expert, Dr Mesley Chapam, said the Tinubu government must “begin a comprehensive probe of the money spent on the refineries in the last three decades,” noting that the investigation must be done in the open in the full glare of the public.

“We need to know those who awarded the contracts, those who executed them, and all the principal actors and find out what they used the money they said they spent for,” he noted, adding that doing this will entrench transparency into the oil and gas industry.

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An economist, who spoke on the condition of anonymity, said the trillions of naira could have been channelled to education or health, rather than wasted on the refineries that are no longer competitive.

“If the money had been spent on education or health, we would have seen the outcomes now. But after spending all these trillions, we still heavily rely on Dangote Refinery and importers for petrol. It is an economic sabotage and those involved, including Kyari who spent almost $3 billion on the four refineries recently, should be render an account of what they did.”