Nigeria’s four state-owned refineries in Port Harcourt, Warri, and Kaduna have consumed billions of naira, yet they have produced little more than controversy and losses.
As pressure mounts on President Bola Tinubu’s administration to demonstrate fiscal discipline and improve domestic fuel supply, the fate of these refineries has resurfaced as a critical policy dilemma.
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President of the Dangote Group, Aliko Dangote, stirred up renewed conversations over the fate of the refineries last Thursday, saying that the Port Harcourt, Warri, and Kaduna refineries might never resume operations, even after about $18 billion had been spent on their turnaround.
Despite multiple rehabilitation attempts, the facilities remain largely non-functional. Now, prominent voices are split: some urging the government to abandon the costly project altogether, others insisting that divestment would threaten national control over a strategic sector.
The case for selling the NNPC refineries
Addressing members of the Global CEO Africa from the Lagos Business School at his Lekki refinery, Dangote expressed pessimism over the possibility of the state-owned refineries working again.
The Dangote Refinery CEO lamented former President Umaru Musa Yar’adua aborting his acquisition of the government refineries in 2007, saying the late president was poorly advised.
“They said they just gave them [NNPC refineries] to us [Dangote and other buyers] as a parting gift or so. And as of today, they have spent about $18 billion on those refineries, and they are still not working. And I don’t think, and I doubt very much if they will work,” he said.
Former President Olusegun Obasanjo is among those calling for an end to what he sees as wasteful spending. According to Obasanjo, some Nigerians, including Dangote, once paid $750m to take over the refineries; however, his successor, Yar’adua, aborted the deal.
“The NNPC knew that they could not [successfully rehabilitate and operate the refineries], but they knew they could eat and carry on with the corruption that was going on in the NNPC. When people were there to do it, they put pressure. In a civilised society, those people should be in jail,” Obasanjo had said.
In January after the Tinubu administration embarked on the refineries’ fresh rehabilitation, the former president maintained that the facilities will not work under government control.
“I was told not too long ago that since that time, more than $2bn have been squandered on the refineries and they still will not work,” he said.
Political economist, Professor Pat Utomi, shares that sentiment. In an interview with Punch, the economist indicated that the refineries are money pits, saying spending money on them will not solve the problems.
“I said it so many times, but because they wanted to spend the money, they said they could repair it. Anyone who understands how such things are run will know that such things will be a waste,” he said. “It was obvious. It should have been sold a long time ago if they listened.”
The case for retaining the dysfunctional refineries
Not everyone agrees with the sell-off argument. Henry Okojie, a member of the House of Representatives, Henry Okojie, believes the refineries can still serve national interests if managed properly.
“It is rather too hasty to say that the refineries would be sold,” he said.
Okojie, who doubles as the Chairman, House Committee on Petroleum Resources (Midstream), however, said the committee would do a comprehensive investigation is underway to unmask possible fraud in the system in the coming weeks.
“One thing is clear, we cannot encourage the Federal Government to continue to pump money into a project that is not economically viable. At the same time, we will not permit anyone to sabotage efforts to get these refineries to work for the nation. This is all I can say for now,” he added.
A costly problem demanding a decision
Despite opposition to a sale of the refineries, even the Group Chief Executive Officer of the NNPCL, Bayo Ojulari, has stated that a strategic review of NNPCL’s refinery operations was underway and that “sale is not out of the question.”
In an interview with Bloomberg in Vienna, Austria, on Friday, Ojulari noted that the country had invested heavily without any tangible outcome.
The refineries’ history is littered with missed opportunities and ballooning costs. In addition to the cancelled sale under Yar’Adua, billions have been sunk into turnaround maintenance contracts with little to show. At one point, NNPCL reported spending ₦10 billion on staff salaries and overhead for the idle refineries in a single year, without producing a drop of fuel.
Despite multiple projected restart dates, there is still no clear path to profitability or consistent output.
Now, with mounting debt, limited fiscal space, and a shifting energy landscape shaped by Dangote’s private refinery, the Tinubu administration faces a stark choice: continue funding a failed model or cut losses and pivot toward private-led refining.
FURTHER READING
Whatever direction it chooses, the federal government cannot afford another year of indecision or more taxpayer billions sunk into facilities that refuse to work.
Philip Ibitoye is a Special Correspondent with EKO HOT BLOG. Click here to find daily analysis and critical insight on trending issues in Lagos and other parts of Nigeria.
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