REFINERIES AS MONUMENTS TO WASTE

It’s time to privatise them

After years of plain deceit during which enormous scarce public resources were spent, the Nigerian National Petroleum Company Limited (NNPCL) has finally confirmed what we have been saying on this page: The federal government refineries are no more than monuments to waste. “When we came in, the refineries were a hot topic. Nigerians were angry, expectations were very high, and we were under extreme pressure. After a detailed review, it became clear that we were simply wasting money,” the NNPCL Group Chief Executive Officer, Bayo Ojulari, admitted at the Nigeria International Energy Summit (NIES 2026) in Abuja last week. “When we looked at the net outcome, we were leaking value with no clear line of sight to profitability.”

As unfortunate as that confession may be, Ojulari has not said anything new. The question is why it took the NNPCL this long to admit what has been clear to many Nigerians for decades. And only after several billions of dollars have been spent on the Turn Around Maintenance (TAM) of these same refineries. Meanwhile, it has for long been obvious that the issue with the refineries is not just that they do not produce refined products for Nigeria’s domestic economy, but also that they gulp huge funds as operational expenditures (OPEX). 

Our position on the state of the nation’s refineries is clear and has not changed. They are huge cost centres to the government and country, and we have always argued that they should be handed to credible private entities to restore their full productive capacities. A quick visit to the Port Harcourt refinery and its neighbour, Indorama Eleme Petrochemical Industry, which was privatised in 2006, reinforces this position. If Eleme can be restored to efficiency with private funds and still pay dividends to the federal government, privatising others should not be a problem, we have always reasoned. 

While the rehabilitation of moribund refineries has remained the unrelenting mantra since 1999, it is now clear that we cannot continue to subsidise failure, which the refineries clearly represent, at great national cost. Ojulari’s position on the way forward is already documented: He supports their privatisation. But in doing this, we also strongly insist that competent consultants must be engaged to evaluate the assets of the refineries before a supervisory sale closely monitored by the National Council of Privatisation (NCP) and Bureau of Public Enterprise (BPE) could be undertaken.

For as long as our refineries remain within government’s absolute control, Nigeria will continue to lose value from their existence, scarce financial resources will be wasted on their repairs, salaries will be paid to hundreds of workers for doing nothing, and the country’s downstream petroleum sector will remain largely untapped to move millions out of poverty. So, the choice is now clear: It’s either the refineries are sold to private operators through a privatisation exercise or put into a transparent joint venture ownership and operatorship arrangement with trusted private investors.  

To ensure that the processes leading to the refineries’ divestment are not interfered with by politics, we strongly recommend that a transparent and fair bidding process independently managed by the BPE, and transaction advisors be adopted while a post-privatisation performance mechanism be set up to review and checkmate likely unwholesome activities. It makes no sense to continue to waste scarce resources on unproductive refineries.

The reality is that Nigeria is fiscally broke and should spend scarce money wisely. The times we live in demand of governments across the world to be economically thoughtful. We cannot continue to spend billions of dollars on phony repairs of refineries that are basically unproductive. We need a clear and sensible solution to what has become a cyclical waste of scarce resources.