In December 2024, the Nigerian National Petroleum Company Limited announced the successful restart of two major refineries.
The Warri Refining & Petrochemicals Company in Delta State reportedly resumed operations on December 30, while the Port Harcourt refinery allegedly commenced crude oil processing on November 26.
However, Nigeria’s former President, Olusegun Obasanjo, shared his concerns about the refineries, citing inefficient government management and corruption as major issues.
Obasanjo expressed confidence in private management, pointing to Aliko Dangote’s effective management of his privately owned refinery as an example.
Nigeria’s public refineries, under perpetual government control, have remained trapped in a cycle of dormancy and inefficiency. At best, they operate sporadically, with the country squandering resources on endless rehabilitation efforts that yield little progress.
Now, six months after the alleged successful restart of the two major refineries, recent developments have validated those doubts.
This reality was underscored again in May when the NNPC announced that it had shut down the old Port Harcourt Refinery in Eleme, Rivers State, for another round of maintenance.
Despite over $1.5 billion spent on refurbishment, the refinery was closed for “planned maintenance and sustainability assessment.”
This abrupt shutdown has raised concerns, especially as it followed reports that the refinery was only blending naphtha into diesel, while questions hung over its actual petrol production.
For three decades, Nigeria has depended on petrol imports, incurring enormous costs, while its four public refineries, with a combined nameplate capacity of 445,000 bpd, remained largely inactive.
“By introducing competition and promoting innovation, privatisation could help address fuel scarcity, potentially leading to lower pump prices.”
The Warri Refinery, which has a capacity of 125,000 bpd, faced a similar fate. After a brief resumption of operations in December 2024, it shut down again within a month.
Yet, the Federal Government said it had provided $1.55 billion for the rehabilitation of the PH Refinery, $740,669 for the Kaduna Refinery, and $656,963 for the Warri Refinery. This is money badly spent.
Sadly, the epileptic performance of the Warri and PH refineries evokes memories of past failures, and there are genuine fears that the funds spent on rehabilitation may have been wasted once again.
The refineries’ history is littered with failed Turn Around Maintenance projects and repeated waste of taxpayer funds on ventures that have become white elephants.
It is increasingly clear that, under government ownership, these refineries are unlikely to ever operate efficiently.
Last year, in an attempt to address the management challenges and bolster energy security, NNPC announced plans to partner with reputable operations and maintenance companies.
The collaboration aims to optimize the performance of the Warri Refining and Petrochemical Company and Kaduna Refining and Petrochemical Company, ensuring reliable and sustainable operations that meet the nation’s fuel supply demands and energy security obligations.
Privatising Nigeria’s refineries could be a game-changer for the country’s oil and gas sector.
By introducing competition and promoting innovation, privatisation could help address fuel scarcity, potentially leading to lower pump prices.
If this development is successful, it could also have a significant effect on the broader economy, stimulating growth and development.
The effect of privatising these facilities will not only enhance Nigeria’s self-sufficiency in petroleum products but also significantly reduce operational costs.
It could revive Nigeria’s energy sector, paving the way for greater economic stability and self-sufficiency.
By introducing and increasing private ownership in Nigeria’s oil and gas facilities, the government is on the voyage of transforming the sector.
A compelling case study is evident in Angola, where the strategic collaboration between public and private entities in the oil sector has successfully attracted foreign investment.
The country’s proactive efforts to enhance its refining capacity through collaborative initiatives are aimed to transform the country into a leading regional oil supplier in Southern Africa.
There’s no doubt that privatisation promotes national development, and Nigeria’s telecommunications industry is a living example.
The deregulation of the sector, initiated in 1992, has resulted in tangible results, transforming various regions across the country.
Prior to the deregulation, Nigerian Telecommunications Limited held a monopoly on the country’s telecommunications sector, operating under sole government control.
This limited Nigerians’ access to telecommunications services, stifled technological advancement.
The sector’s sluggish growth pushed the government to adopt privatisation, a strategic move that has since injected development and transformed the telecommunications landscape in Nigeria.
In a tremendous move, the government divested 75 percent of NITEL’s shares to Transcorp, a Nigerian multinational conglomerate, and 25 percent to various Nigerian companies. The strategic move has yielded remarkable results.
In 2000, NITEL’s subscriber base was a mere 30,000, whereas today, Nigeria boasts an impressive over 200 million phone subscribers. This is a testament to the transformative power of privatisation in expanding access to telecommunications services.
If there’s one closer example of the success of privatisation in the oil and gas industry, the Dangote refinery is a full proof.
The Dangote Oil Refinery, Africa’s largest, has become a major driver of Nigeria’s export market.
Its impact is not hard to seek. The 650,000-barrel-per-day single-train facility is expected to raise Nigeria’s GDP growth rate from 4.15 percent in 2024 to 6.21 percent in 2030, according to a report by Analysts Data Services and Resources Limited.
Last month, Aliko Dangote, the founder, stated that it was sending two cargoes of jet fuel to Saudi Aramco as part of its plans to expand. This development would not only make Nigeria a cynosure for refining, but potentially strengthen it foreign exchange inflows.
African countries—such as Ghana, South Africa, Angola and Cameroon—are now buying petrol from the Dangote refinery. This is another profound impact of privatisation.
By privatizing its refineries, Nigeria can draw into a wealth of foreign investment, specialized expertise, and innovation, thereby marking a significant shift away from the government’s existing approach and creating a platform for a more efficient and competitive oil sector.
Privatising the four government refineries would be a significant step towards refining over 1 million bpd domestically. It will bolster government finances and relieve it of the burden of looking for scarce dollars to fix the refineries.
Privatising the refineries will engender the much-needed competition in the crude refining sub-sector of the oil industry. With a 650,000-bpd capacity and the government refineries’ inactivity, the Dangote Refinery has almost become a monopoly.
Thus, to create a truly competitive crude refining industry, the Federal Government needs to put its refineries in a position to compete through privatisation.