There have been no shortage of mind-boggling revelations in the oil sector following the recent partial removal of subsidy on petroleum products. Each day seems to open a fresh can of worms and public outrage. The multi-billion dollar Kaduna Refinery and Petroleum Company (KRPC) is one of such plants hugging the headlines for the wrong reasons.

According to an investigation by the Senate Committee on Petroleum (Downstream), the plant has shortchanged the nation of an annual revenue in excess of N700 billion, while an astonishing N12 billion is reportedly spent annually as salaries on idle workers.

The committee’s findings, after an oversight tour of the plant, also revealed that the refinery built over 20 years ago with an installed production capacity of 110,000 barrels per day (bpd) has deteriorated so much. The plant is currently refining less than 30,000 bpd. Chairman of the Committee, Senator Magnus Abbe, obviously angry over the development said it was discovered during its oversight duty that besides the revenue losses, the committee could not come to terms with the facts provided by the management of the company that it spends N12 billion each year on staff salaries.

Beyond that, the committee found that instead of concentrating on its mandate, the authorities of the refinery have converted what is left of the facilities into producing containers for companies and collecting crude oil deals from the Pipelines and Products Marketing Company (PPMC), a subsidiary of the Nigeria National Petroleum Corporation (NNPC) without proper accounting.

We consider these discoveries very disheartening. Based on the investments in the company, it is supposed to make a projected annual revenue of N719 billion for the Federal Government. It is however not too surprising that this sort of sleaze pervades the company.

This development reflects the revolving door of corruption that has made reforms in the oil industry difficult. It is regrettable that the Kaduna Refinery has suffered such a decay in both infrastructure and accountability. This, of course, speaks volumes of the terrible state of the other three refineries located in Warri, Delta State and Eleme and Port Harcourt, Rivers State. For years, these refineries have been in a comatose state as a result of obsolete equipment, lack of Turn Around Maintenance (TAM) and outright mismanagement.

The revelations by the Senate Committee should be used as a launch pad for a more detailed probe into, for instance, how such a gargantuan expenditure was incurred on staff and “idle workers”. A comprehensive audit of the financial records of the company is expedient. Government should appoint a reputable auditing firm to carry out the assignment, with a clear-cut mandate that will unravel malfeasance in the company and how to check them.

But central to these disclosures is the urgency for the Federal Government to revamp the refineries and put them back on stream. At present, all of them are currently producing far below installed capacity. Little has been seen in government’s assurance to begin TAM in spite of contracts already awarded. Neither has government’s plan to set up Greenfield refineries in Bayelsa, Lagos and Kogi states gone beyond the official announcement. The result of this seeming lack of seriousness has created a cartel of fuel importers who until now, depended heavily on government subsidy.

If government’s planned deregulation of the downstream oil sector would yield the desired fruits, this is the time to begin a comprehensive revamp of the refineries and construction of new ones. But, the existing ones must be revived first. The integrity of those who manage the refineries is vital. Also, the plan to bring foreign investors into the revival and construction of new refineries can enhance economic growth if well handled. Since the oil sector still accounts for the bulk of our revenue, every decision in the sector should be well thought out.

 

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Why is there a refinery in Kaduna?

Something that will never be explained.