The Nigerian Nationwide Petroleum Firm Restricted (NNPC Ltd.) has revealed that it shut down Nigeria’s state-owned refineries after inside assessments confirmed they have been working at “monumental losses” and destroying nationwide worth.
The disclosure was made by the Group Chief Government Officer of NNPC Ltd., Mr Bashir Ojulari, throughout a Hearth Chat on Securing Nigeria’s Vitality Future on the Nigeria Worldwide Vitality Summit (NIES) 2026 held in Abuja on Wednesday.
In response to Ojulari, the choice adopted an in depth technical and industrial evaluate triggered by mounting public anger over years of heavy funding within the refineries with little to point out by way of efficiency, forcing the corporate to confront the financial realities of its operations.
What they’re saying
Ojulari mentioned the refineries turned an instantaneous precedence when his management group assumed workplace, given the depth of public scrutiny and expectations surrounding their rehabilitation.
- “Once we got here in, refineries have been a sizzling subject. Nigerians have been indignant, expectations have been very excessive, and we have been beneath excessive stress.”
- “After an in depth evaluate, it turned clear that we have been merely losing cash.”
- “Once we appeared on the internet end result, we have been leaking worth with no clear line of sight to profitability.”
- “That trajectory would have meant worth destruction for the following 30 years. We weren’t going to do this.”
He defined that regardless of crude oil being equipped month-to-month, capability utilisation averaged simply 50 to 55 per cent, whereas working bills and contractor prices continued to escalate, making continued operations economically unjustifiable.
Backstory
Nigeria’s state-owned refineries in Port Harcourt, Warri, and Kaduna have lengthy struggled with power underperformance regardless of repeated turnaround upkeep efforts and billions of naira in public spending.
- Through the years, successive administrations prioritised financing and engineering, procurement and building (EPC) contracts, typically with out adequate consideration to long-term operations and upkeep.
- This method, in line with Ojulari, created a construction the place a number of layers of contractors extracted worth with out being accountable for sustained efficiency.
- The refineries more and more produced mid-grade petroleum merchandise whose market worth did not justify the standard and value of crude oil equipped to them.
These structural weaknesses, he mentioned, meant that even when the refineries have been working, they have been eroding worth moderately than creating it.
Extra insights
Ojulari famous that his background in upstream oil and fuel meant that his group needed to endure what he described as a “vertical studying curve” to completely perceive the economics of the downstream sector.
- He recognized the shortage of “pores and skin within the sport” by operators as a key flaw, arguing that financing, EPC, and operations and upkeep contracts have been all designed to extract worth moderately than maintain property.
- To handle this, NNPC plans to shift from contractor-led operations to an fairness partnership mannequin involving skilled refinery operators.
- Below this mannequin, companions would purchase fairness stakes, lead day-to-day operations, and assist rebuild native technical capability inside Nigeria’s refining system.
Ojulari confused that this method was about industrial sustainability, not asset stripping.
- Ojulari mentioned discussions have been ongoing with potential buyers, together with a serious Chinese language petrochemical firm, with website inspections anticipated within the close to time period.
- He additionally credited the Dangote Refinery with easing stress on Nigeria’s vitality system, describing it as well timed and strategic for the nation.
- “Whether or not you like Dangote or hate him, thank God for the Dangote Refinery,” Ojulari mentioned, including that its presence offers NNPC room to make higher, much less pressured selections.
What you need to know
NNPC’s feedback come amid sustained scrutiny over the destiny of Nigeria’s refineries and broader downstream reforms.
In December, the Nigerian Financial Summit Group (NESG) renewed requires the Federal Authorities to fast-track the privatisation of state-owned refineries, arguing that it might enhance home refining capability and scale back Nigeria’s dependence on imported petroleum merchandise.
