House probes N120bn debt incurred by refineries

10 December 2015, Abuja – The House of Representatives has directed its Committees on Petroleum (Upstream and Downstream) to investigate the conditions of the nation’s four refineries, due to reports of N120.07 billion debt incurred in August and September 2015, despite performance below installed capacity.

Warri Refinery.

Warri Refinery.

The resolution of the House followed reports that the refineries being managed by the Nigerian National Petroleum Corporation (NNPC) had incurred heavy debts.

Hon. Omoregie Ogbeide Ihama (Edo PDP) who sponsored the motion, said the absence of functional refinery contributes to the regular fuel crises in Nigeria.

The Kaduna Refining and Petrochemical Company, the Port Harcourt Refining Company and the Warri Refining and Petrochemical Company were reported to have incurred debts of N120.07 billion in August and September, 2015, he said.

“While their revenues on August was N146.617 billion, their expenditure was N207.287 billion in the month of September. The revenue generated by the refineries was N112.514 billion and the expenditure was pegged at N171.914 billion,” Ihama added.

The lawmaker added that despite the huge debts incurred by the refineries, the capacity utilization of the Warri and Kaduna refineries in September was zero percent as they did not process any crude that month.

Port Harcourt refinery produced at 4.15 percent capacity, he added.

Meanwhile, the Medium Term Expenditure Framework transmitted to the National Assembly by the President on Tuesday, in preparation to the submission of the 2016 budget proposal, has passed second reading in the House of Representatives.
It was subsequently referred to the Committees on Finance and Appropriation.

There are indications that the document would receive speedy approval as the Speaker, Hon. Yakubu Dogara directed that the committees report back to the House on Tuesday December 15, 2015.

Leading the debate, Majority leader, Hon. Femi Gbajabiamila highlighted the major points of the MTEF and Fiscal Strategy Paper. “Section 11 (3) of the of Fiscal Responsibility Act, 2007 states that the Medium Term Expenditure Framework shall contain among other things; A Macro-Economic Framework setting out the Macro-Economic projections for the next three financial years, the underlying assumptions for those projections and an evaluation and analysis of the Macro-Economic projections for the preceding three financial years,” Gbajabiamila said.

The Minority Leader, Hon. Leo Ogor however noted that the manner of configuration of the  document did not take into account the actual projected accruable income and expenditure for the federation expected in 2016 and beyond.

This, he said, is necessary especially as this would have provided details into how much would be made available for sharing among the three tiers of government.

He called for the withdrawal of the documents on grounds of the omissions, so that a more comprehensive analysis of income and expenditure envisaged in the fiscal years under consideration, can be re-submitted.
Ogor again raised questions on the astronomical increase in subsidy payments when crude prices continue to crash on the global market.

Hon. Chike Okafor (Imo APC) noted that the modalities for the identification of the beneficiaries of the N500billion slated for social welfare, is yet to be made know.
Okafor noted that the lack of a credible database, may open welfare schemes up to exploitation in different forms.

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