N70.95b Spent On Moribund Port Harcourt Refinery In Two Years – Report

BY: Mohammed Taoheed

An audit report of the Nigerian National Petroleum Company Limited (NNPCL) has revealed that the moribund Port Harcourt Refinery Company (PHRC) gulped about N70.95 billion in two years.

This is seen in the PHRC Audited Financial Statements for 2021 made available to Track News Nigeria, where it is seen that the oil firm spent N39, 491,468, 000 last year.

The NNPCL said that that the depreciation and impairment of financial assets of the PHRC was N9, 758,817,000 in 2021 and N96, 030,000 in 2020.

It revealed further that the assets of the company are outdated or non-current assets.

Part of the report reads: “The company incurred N48.887billion for the year ended 31st December, 2021, as against the sum of N28.6 billion incurred in 2020 from normal operating activities.

“The losses have arisen principally from the inability of the company to refine a single drop of crude oil in 2021 and other previous years in quantities and at rates above its break-even points, hence it was unable to earn enough revenue to cover its costs.

“As a result of recurring losses, the company’s retained losses as of 31st December 2021 is N555.7 billion (2020): N506.9 billion). However, the parent company (NNPC) is committed to continuing to support the sustenance of its operations through adequate funding.”

The NNPCL stressed that the NNPC did not charge lease rentals in 2021 as was charged in the upper year 2020.

It added that the amount charged to the company up till 2019 was classified as part of intercompany balances and is included in the N323 billion due to NNPC.

The report equally made it known that NNPC provided funds to the tune of N152.2 billion as of December 2021 to the company while another N11.4 billion from intercompany transactions is due to the Corporate Headquarters and all these funds were non-interest bearings.

The company said an amount of N487 billion is due from the company to NNPC as of December 2021 and N447 billion in 2020 under this arrangement.

The report recalled that the corporate headquarters transferred the previously held refining plants (both old and new plants) to the company in 2021 and the net value of the refining plants transferred to the company amounted to N255.459 billion and this amount was resolved to be recognised as a deposit for shares by the corporate headquarter.

On the rehabilitation of refining plants, the report said “the NNPC corporate headquarters has assumed full responsibility for the rehabilitation of the two refining plants of the company in line with approval granted by the Federal Executive Council (FEC) in March 2021, and so far, the NNPC on behalf of the company has released milestones of payment to the sum of $324,883,720.00 (N135 billion equivalent ) to the contractors out of the approved sum of $1.5 billion (approximately N625 billion. As of this balance date, this figure has not been recognised by the company in either the assets or corresponding liability but this disclosure is important for the purpose of accounts.”

The report said the Warri Refinery and Petrochemical Company (WRPC) supplies PHRC with spare parts and chemicals for the running of the plant when out of stock and also the transfer of outstanding loan balance concerning the transfer of seconded staff to WRPC.

It added that the net transactions between the company and WRPC amounted to N5.6million during the year while the amount due from WRPC as of the year ended 2021 was N89.8 million and N882.20 million as of 2020.

Also in the report, the average number of persons employed during the year was 32 management officials, 366 senior and 52 junior staff members in the year under review.

In the previous year, the report identified 26 management staff members consisting 404 senior employees and 57 junior staff members..