Mele Kyari wasted N22.55 billion paying staff of unproductive Port Harcourt Refinery staff salary in 2020 alone, ENigeria Newspaper reports.
Managers of the Port Harcourt Refinery Company (PHRC) have proved their inability to make sound financial judgments, as evidenced by the company’s 2020 financial statement.
The local refinery, which is run by engineer Ahmed Dikko, had no revenue in 2020 but expended N19.215 billion in administrative costs, including paying salaries, wages, and other benefits to unproductive staff this is according to NNPC AUDITED FINANCIAL REPORT.
Furthermore, the refinery, which is operated by Mele Kyari and is one of the businesses of the Nigerian National Petroleum Corporation (NNPC), hired 487 new employees in 2020.
The 487 new workers are paid N3.93 billion annually, suggesting that each of them receives an average of N8.072 million annually or N672,713 monthly, demonstrating the mismanaged refinery’s high level of financial recklessness.
They make around the same amount each month as a typical Level 8 Federal Government employee.
According to the company’s compensation statistics on its financial records, the refinery hired 1162 new employees between 2019 and 2020, paying N41.163 billion in salaries and wages.
In 2020, 430 of the 487 employees were senior and management, accounting for 88.2 percent of the total workforce, with significant financial ramifications. Only 57 were part of the junior staff.
Furthermore, the refinery employed 656 management and senior personnel in 2019, accounting for 97 percent of the total, resulting in significant financial ramifications.
“It is looking like jobs for the boys at our dear refineries. And I’m curious because most of these men are making a lot of money,” said Ellam Ogochukwu, a financial consultant based in the United States.
“Whoever is in charge of that company deserves to answer a few questions,” she remarked.
In addition, personnel pensions, gratuities, and ‘long service awards’ consumed N77.76 billion in 2020, compared to N63.41 billion the year before.
Surprisingly, the PHRC’s unproductive workers were allowed to take out auto loans, compassionate loans, and advances totaling N1.001 billion in 2020 under Dikko and his superior Kyari.
In 2019, the amount was N597.297 million.
This refinery, which generated no revenue in 2020, incurred a total loss of N53.179 billion.
The company had no sales in the previous year and a comprehensive loss of N50.530 billion.
Between 2017 and 2020, the corporation lost N241.609 billion in total. During this time, it only made N6.27 billion in income.
“This refinery didn’t make any oil.” What you have is certain employees who merely iron their clothes, go to work, and come back at the end of the day without contributing to the company’s productivity,” said Chapel Hill Denham Mustapha Wahab, an oil and gas analyst in Lagos.
The chairman of the Port Harcourt refinery is NNPC Managing Director Mele Kyari, Ahmed Dikko (MD), Babatunde Sofowora (Executive Director of Services), Reginald Udeh (Executive Director, Finance and Accounts), James Ifeanyichukwu Ajibo (Executive Director, Operations), and Awaisu Muazu (Executive Director, Operations) are his immediate successors (late, served till July 2020).
In 2020, these directors received N99.742 million in emoluments, up 67 percent from N59.650 million in 2019.
Same old story
In 2019, the Port Harcourt refinery did not record any revenue. Yet, it reported N25.19 billion in expenses.
Six directors collected N59.65 million in fees, meaning that each of them received an average payment of N9.94 million a month in 2019.
According to the NNPC of the six directors in 2019 were: Group Managing Director of NNPC Malam Mele Kyari; Managing Director Abba Bukar (who retired in March 2020); Executive Director of Services Babatunde S. Sofowore; Executive Director of Operations Ganiyu Abiodun Owolabi; another Executive Director of Operations Engr Abel N. Imonighavwe; and Executive Director of Finance and Accounts Mrs Aramide M. Ekundayo.
Salaries, wages , allowances, redundancy and pension costs gulped N22.195 billion. What that means is that, on the average, each staff member received N32.88 million in 2019 from a company that made no revenue. This amounted, on the average, to N2.74 million each month.
Total salaries and pays received by staff of Port Harcourt refinery between 2017 and 2019 amounted at N80.57 billion. But revenues received by the company within the period were estimated at N6.27 billion – implying that the NNPC sought N74.3 billion from outside the refinery to pay staff salaries.
The N1.5bn rehabilitation controversy.
Rather than privatize the refinery, the NNPC chose to pump an equivalent of 4.5 percent of Nigeria’s 2021 budget ($1.5 billion) into the refurbishment of a refinery that comprehensively lost N206.069 billion between 2017 and 2020.
Oil and Gas Analyst at Lagos-based Chapel Hill Denham Mustapha Wahab said that the investment in the refinery made no sense.
“Dangote refinery is coming on board and can process about 650,000 barrels per day of crude oil – highest in the world. NNPC has taken 20 per cent stake in Dangote.
“Why then are you resuscitating Port Harcourt refinery? We have done the analysis at Chapel Hill Denham and found that government should be spending $3billion or more to ensure efficiency of the refinery. So, it does not make investment sense because you are not going to compete with yourself,” he said.
“Two, Some countries are exiting low-carbon energy sources and migrating to clean energy. So, after rehabilitating Port Harcourt refinery, for how long will you enjoy its benefits, given that your market is not just Nigeria but also those countries exiting what you intend to sell to them?” he asked, urging the Federal Government to concession it for optimal benefits to the Nigerian economy.
Oil and Gas Governance Consultant Henry Ademola Adigun told The ICIR that the refinery was badly managed.
“The point is that the refineries are still badly managed. The faster the corporation becomes a limited liability company, the better,” Adigun said.
“You have a refinery not producing anything and not making revenues but salaries are being paid. How did the NNPC make the profit they said they made when the inefficiencies are there. The profit and loss do not show anything. They simply want to make it attractive to the stockman.”
He said there was no cost-cutting by the NNPC or the refineries, adding that there were also “no innovative efficiency, no restructuring or replanting and no cost-saving on salaries and wages.”
Former President of the Nigerian Society of Petroleum Engineers Joe Nwakwue told The ICIR that the only thing that the corporation could have done was to sell off the refineries.
“If you have a factory and is not producing, you will have to pay the gate man and the even the insurance company.”
The PHRC was commissioned in 1965. It was made up of two refineries: the old refinery commissioned in 1965 with capacity of 60,000 barrels per stream day (bpsd) and the new refinery commissioned in 1989 with an installed capacity of 150,000 bpsd, according to the NNPC.
It has a capacity of 210,000 bpsd with five process areas. In 2000, the then government of Nigeria shut down the refinery for a turnaround maintenance. Other three refineries in the country were also expected to undergo a similar process, Oil & Gas Journal said.
As of that time, $364 million had already been spent on endless turnaround maintenance (TAM) services . About $25 billion has been spent on turnaround maintenance in the past 25 years, according to The Guardian.
The Institute for Global Energy Research, in a 2004 article, said the barrage of corruption, poor management, sabotage and lack of the mandatory turnaround maintenance (TAM) every two years had made all the refineries inefficient, making them operate at about 40 per cent of full capacity.
The NNPC said in April 2020 that it would hand over the four refineries in the country to a private firm to manage.
“We are going to get an O&M contract; NNPC won’t run it. We are going to get a firm that will guarantee that this plant would run for some time. We want to try a different model of getting this refinery to run.
And we are going to apply this process for the running of the other two refineries.”
However, this has not happened. Rather, the corporation has sought money to rehabilitate the failed refineries.
It has prided itself on cost-cutting efficiency, but its refineries have incurred humongous losses.
Analysts say NNPC has no cause to hold onto the running of the refineries, having shown no capacity to manage it.