The Nigerian National Petroleum Company Limited (NNPC) may be moving toward divesting from its traditional refining operations, as its current head, Bayo Ojulari, suggests that the Port Harcourt, Warri, and Kaduna refineries may no longer be viable assets.
Speaking during an interview in Vienna, Austria, at the 9th OPEC International Seminar, Ojulari revealed that a strategic review of the company’s refining operations is underway and should be finalized by the end of the year. He hinted that one potential outcome could be the sale of the underperforming refineries, stating that “all options are on the table.”
Ojulari’s remarks align closely with recent concerns raised by Africa’s richest man, Aliko Dangote. On Thursday, Dangote questioned the functionality of NNPC’s refineries, despite reports that the government has spent around $18 billion on them over the years. He expressed skepticism that they would ever return to productive use.
Ojulari echoed similar concerns, acknowledging the government’s substantial investment in revitalizing the refineries but noting that results have been underwhelming. He pointed to outdated infrastructure and the difficulty of refurbishing long-abandoned plants as major challenges.
“Over the years, we’ve invested significantly and introduced new technologies, but the returns have been disappointing. When you’re dealing with old plants that have been idle for so long, complexities multiply,” he said.
Ojulari assumed leadership of NNPC in April, following the removal of his predecessor, Mele Kyari, by President Bola Tinubu. Kyari had previously championed the turnaround of the refineries and promised their full restoration, a stance now at odds with Ojulari’s current evaluation.
During a separate engagement with members of Global CEO Africa at his Lekki-based refinery, Dangote reiterated his doubts about the state-owned refineries. He referenced a previous acquisition of the facilities in 2007 under President Olusegun Obasanjo’s administration, which was later reversed by his successor, President Umaru Yar’Adua. Dangote said political pressure and claims that the refineries were undervalued led to the cancellation of the sale.
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Dangote contrasted his own refinery’s performance, claiming it currently dedicates more than 50% of its output to petrol production—with the much lower output levels recorded by the government-owned facilities. He also described efforts to refurbish the older refineries as akin to modernizing a decades-old vehicle, arguing that even replacing the engine wouldn’t resolve the fundamental limitations of obsolete design.
His sentiments have been echoed by former President Obasanjo, who has been critical of NNPC’s continued attempts to revive the refineries. Obasanjo said oil majors, including Shell, declined his administration’s invitation to manage the facilities, citing inefficiency and operational complexity. He warned that the assets might ultimately be worth little more than scrap if privatization is delayed further.
In January, Obasanjo again criticized the billions of dollars spent without tangible outcomes. He questioned why, if the refineries were functional, Nigeria would still be relying so heavily on Dangote’s facility.
Calls for the privatization of NNPC’s refineries have intensified following recent operational setbacks. The Port Harcourt refinery, which was briefly declared operational, has since gone offline again. Similarly, the Warri facility was shut down within a month of its supposed reactivation.
Industry stakeholders, including the Manufacturers Association of Nigeria, argue that the refineries have become a financial burden. They have urged the government to consider selling them off and using the proceeds to support modular refinery projects.
Reports indicate that over the past decade, vast sums have been allocated to the refineries with little return. In 2021, $1.4 billion was approved for rehabilitating Port Harcourt, $897 million for Warri, and $586 million for Kaduna. Turnaround maintenance efforts between 2013 and 2017 alone reportedly consumed $396 million. Yet, the plants remain dormant, unable to contribute meaningfully to domestic fuel production.
As the NNPC continues its strategic review, the future of Nigeria’s aging refineries remains uncertain. What’s becoming clearer however, is that public patience and investor confidence are wearing thin.
