FINANCIAL audit of the 2018 expenditures of Nigeria’s refineries released by the Nigeria National Petroleum Corporation (NNPC), last week, shows that while the refineries recorded substantial losses, their administrative expenses balloon over the years.

For the first time, the NNPC also published the audited accounts of its 20 subsidiaries and business divisions online in a bid to promote transparency around its operations which has been shrouded in secrecy for years.

The nation’s major refineries which are subsidiaries of the NNPC captured in the 2018 audit include Kaduna Refining and Petrochemicals, KRPC, Warri Refining & Petrochemicals Company, WRPC, and Port Harcourt Refining Company, PHRC, Limited.

The records show that the three refineries reported a combined loss of N154.4 billion with Kaduna refinery posting zero revenue for the 2018 financial year.

According to a report, the Group Managing Director, GMD, of the NNPC, Mele Kyari, said the failure to fix the country’s refineries over the years was a strategy problem that requires a different framework from the past.

“This framework would enable others to help us. Ultimately, we will change that equation and that is very simple. We will set a target for ourselves and have a clear strategy for achieving it,” he said.

Nigeria imports over 90 per cent of its refined petroleum products especially petrol to meet its current needs, as the nation’s refineries are unable to meet the demands in the country as they are dilapidated and poorly maintained, Reuters has reported.

A Price Waterhouse Coopers, PWC, data estimates Nigeria’s per capita refining capacity at 0.002 barrels per day/capita which pales into insignificance when compared to Libya at 0.06 barrels per day /capita and South Africa on 0.01 barrels per day/capita.

The annual financial accounts revealed that Port Harcourt refinery marked a slump in its revenue which was declared as N1.5 billion in 2018, indicating a 69 per cent drop compared to its earnings of N4.8 billion in 2017. 

Between 2014 and 2018, Port Harcourt refinery posted losses for five years consecutively totalling N206 billion while a breakdown of its administrative expenses incurred within the period comprising salaries, guest house costs, overhead costs and others was N106 billion.

However, Warri refinery with a staff strength of 583 in 2018 after it had depleted its workforce from 663 in 2017, registered a slight increase in its revenue earnings with N1.9 billion in 2018 from the N1.2 billion declared as its total revenue in 2017.

The rise in revenue for Warri refinery in 2018 did not reflect during the close of the annual financial year as it posted N44.4 billion after-tax losses which were lower compared to N84 billion lost by the company in 2017.

However, WRPC’s administrative costs dropped in 2018 by 52 per cent at N34 billion compared to N71 billion spent in 2017 but the audit also exposed other inconsistencies where N836 million was spent on printing and stationeries in 2018 while N73 million was also spent on the same purpose in 2017.

After reducing its workforce, the salaries, allowances and wages of the company increased from N12.9 billion in 2017 to N13.8 billion while staff welfare also increased extensively from 73.8 million in 2017 to N275 million.

For Kaduna refinery, the 2018 audit of its financial books shows how not to run a business enterprise which saw the company earning zero revenue from processing fees which it blamed on the shutdown of its plant and an ongoing through around maintenance.

While the company recorded a loss of N64 billion, its administrative expenses incurred within the period under review was N39.9 billion with several suspicious items included in the audited account that were not consistent with its operations since the plant was shut down.

Despite, recording losses five years consecutively the company in 2018 spent N447 million in the training of its staff, local and international travels accounted for N662 million and photocopying of documents that costs N4 million.

Several items added on its include electricity bills at N30 million, office expenses gulped N353.6 million, an item tagged as consumables were said to cost N3.6 million, rent also took N21 million, consultancy services cost N843 million, salaries and wages were pegged at N9 billion, with employee benefits at N13.8 billion amongst other administrative expenditures.

Also, the report showed a certain provision which the auditors designated under inventories as goods in transit which cost N128 million while the refinery plant was shut down due to ongoing maintenance.

The financial records also reveal that 36 per cent of the total expenditure at KRPC, was spent on staff welfare which includes direct and indirect costs that account for N23.4 billion, which is odd for a company without a profit in five years, according to the annual report.

Also, 210 workers received N15 million and above which constitutes 67 per cent of the total workforce of 312 workers in 2018 despite shedding off 710 workers from its staff. 

However, the directors at KRPC include Chinwe Osolu (Finance and Accounts), Tsavnande Atighir(Operations), Abdullahi Idris(Services), and Ladenegan Solomon who served as Managing Director until the close of the financial year.

Lekan Olubode was Director of Finance and Accounts before he retired in February 2018 while Bukar Abba got transferred in September before handing over in September 2018.

The four directors received between N10 to N20 million while the highest-paid received N33 million, however, 61 per cent of the company’s income valued at N209 million for 2018 came from interest on employee loans.

Nigeria ranks as one of the largest consumers of refined products in Africa behind Egypt, South Africa, Algeria and Morocco and also accounts for over 7 per cent of Africa’s refined product consumption.

However, it’s not all gloom for the NNPC as the National Petroleum Investment Management Services, NAPIMS, a subsidiary of the corporation was the most profitable subsidiary from the financial statements.

With its revenue at N5.04 trillion in 2018 and a profit margin of N1.01 trillion, it was a boost when compared with a loss of N1.65 trillion from the financial records in 2017.