Nigeria’s oil marketers are rallying behind a controversial proposal to privatize the country’s three major refineries, marking a potential turning point in the nation’s long-struggling downstream oil sector.
The Nigerian National Petroleum Company Limited (NNPCL) is currently reviewing its refinery strategy, with privatization emerging as a leading option after years of failed rehabilitation efforts.
The development comes amid growing frustration over the performance of the Port Harcourt, Warri, and Kaduna refineries, which collectively possess a 445,000 barrels per day capacity but have remained largely non-operational for over a decade.
NNPCL Group Chief Executive Officer Bayo Ojulari recently acknowledged the facilities’ obsolete state during an interview at the 9th OPEC international seminar in Vienna, Austria, confirming that rehabilitation works have not yielded desired results.
Industry Stakeholders Welcome Privatization Proposal
The proposal has garnered significant support from key industry players, who view privatization as the only viable solution to end what many describe as a “financial black hole.” Billy Gillis-Harry, National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), endorsed the move, stating that privatization “looks to be the only reasonable decision to make, considering its history of inefficiencies.”
However, stakeholders are demanding transparency and inclusiveness in the process. Gillis-Harry emphasized the need for proper stakeholder engagement, calling for the involvement of major industry associations, including MEMAN, DAPPMAN, PETROAN, IPMAN, and NUPENG, in any privatization proceedings.
Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), echoed similar sentiments, describing the refineries as a burden on public finances. “The running cost is even higher than what it is earning in revenue or production,” Ukadike noted, citing the success of the Indorama privatization model as a potential template.
Massive Financial Losses Highlight Urgency
The financial toll of maintaining these non-functional assets has been staggering. Government records show that $1.4 billion was approved for Port Harcourt refinery rehabilitation in 2021, with $897 million earmarked for Warri and $586 million for Kaduna refineries. Additionally, N100 billion was reportedly spent on refinery rehabilitation in 2021 alone, with monthly expenditures reaching N8.33 billion.
Between 2013 and 2017, $396.33 million was allocated for turnaround maintenance across the three facilities. Despite these massive investments, the refineries remain unproductive, prompting industry experts to question the effectiveness of continued rehabilitation efforts.
Corruption Concerns and Accountability Demands
The privatization proposal has also reignited concerns about corruption and mismanagement in the sector. Energy economist and policy expert Kelvin Emmanuel has called for investigations into the previous management and board of NNPC, describing the situation as “economic sabotage.”
PETROAN’s Gillis-Harry expressed disappointment with the current administration’s failure to follow through on promised investigations into past refinery rehabilitation projects. He referenced the now-elapsed 30-day ultimatum for revamping the Port Harcourt refinery, questioning the silence surrounding its outcome.
Political Timing Under Scrutiny
The timing of the privatization proposal has raised eyebrows among industry observers. The announcement coincided with remarks by Dangote Group President Aliko Dangote, who suggested that the facilities might never be viable due to mismanagement. This parallel development has fueled speculation about potential political motivations behind the privatization push.
Gillis-Harry cautioned against turning the refineries’ sale into a political exercise, emphasizing the need for clarity and proper stakeholder engagement. “We need to be sure of what is driving this process and understand what is influencing it,” he stated.
Competition Over Monopoly
Industry stakeholders are advocating for an open privatization process that encourages multiple players in the market. The consensus is that competition, rather than monopoly, will ultimately drive efficiency and ensure petroleum product availability for Nigerian consumers.
The privatization proposal represents a significant shift in Nigeria’s oil policy, potentially ending decades of state control over refining operations. However, the success of such a move will largely depend on the transparency of the process and the government’s commitment to addressing past corruption and mismanagement issues.
As NNPCL aims to finalize its review by year-end, the petroleum industry and Nigerian consumers await clarity on the future of these critical national assets. The outcome could reshape Nigeria’s downstream oil sector and determine whether the country can finally achieve self-sufficiency in petroleum product refining.
WHAT YOU SHOULD KNOW
Nigeria’s three major oil refineries—Port Harcourt, Warri, and Kaduna—are likely headed for privatization after decades of failure and massive financial losses. Despite over $2.8 billion in rehabilitation funds and countless turnaround maintenance efforts since 2013, these 445,000 barrels-per-day facilities remain non-operational.
The Nigerian National Petroleum Company Limited (NNPCL) is reviewing its refinery strategy, with privatization emerging as the leading option by year-end.
Industry stakeholders unanimously support the move, viewing it as the only solution to end what they call a “financial black hole” that has drained billions in public funds with zero results.
