Why Nigeria’s Refineries Will Never Work

Eko Hot Blog reports that former President Olusegun Obasanjo has said the four oil refineries in Nigeria will never work.

The four refineries are located in Warri, Port Harcourt and Kaduna states.

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Obasanjo said the refineries will never work as long as the government continues to hold onto them.

The former president who stated this in an interview with The Cable Online Newspaper, said Shell Oil Development Company turned down his offer to them to run the refineries.

He disclosed that after much persuasion the managing director of Shell, at the time, listed four reasons why the oil company wouldn’t get involved in running Nigeria’s refineries, including “too much corruption in refineries.”

It would be recalled that President Bola Tinubu last month assured that the petroleum refinery in Port Harcourt will start working by December 2023.

Tinubu, had in a statement by former presidential spokesman, Dele Alake, in August, said the “Port Harcourt refineries will start production by December 2023 after the completion of the ongoing rehabilitation contract between NNPCL and Italian firm, Maire Tecnimont SpA.”

The President stated this when he met with labour unions at the State House in Abuja to halt the last nationwide protest.

Labour, had among other things, demanded the government’s commitment to getting local refineries to work, an objective that has gulped about N11.35 trillion in the last 10 years.

But responding to a question on the state of Nigeria’s refineries in the interview, Obasanjo said, “They will not work as long as the government is keeping hold of them. When I was president, I invited Shell to a meeting. I told them I wanted to hand over the refineries for them to help us run. They bluntly told me they would not. I was shocked.

“I repeated the request and they stood their ground. When the meeting was over, I asked their big man (MD) to wait behind for a little chat. Then I asked him why they were so hesitant on not taking over the refineries. He said did I want to hear the truth? I said yes. He listed four reasons. One, he said Shell makes its money from upstream and that is where its interest lies. Two, he said they only do downstream or retail as a matter of service. Three, he said our refineries would be bad business for them, that globally, companies are going for bigger refineries because of the economics of refineries. Four, he said there is too much corruption in refineries.

“I thanked him for his honesty. I knew we had a big problem in our hands. I had virtually given up hope on the refineries when God did a miracle. Aliko Dangote and Femi Otedola approached me and said they would be interested in buying two of the four refineries. They said they would buy 51 percent stake in Port Harcourt and Kaduna. I was over the moon. I said, finally, this burden would be taken off the neck of the government. They offered $761 million and paid in two instalments. Unfortunately, Umaru (President Yar’Adua) cancelled the sale and returned the refineries to NNPC. Today, we are still where we were. Someone told me Tinubu said refineries would work by December. I told the person the refineries would not work. This is based on the information I received from Shell when I was the president.”

On the power sector, Obasanjo said “You can only get the power sector right when you get all the fundamentals in the power sector right. In 2006, we ordered 42 turbines that should have been completed if not by 2007 then in 2008. My target was 10,000 megawatts of power by 2007.

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“Up till today, I understand that five of the turbines have yet to be installed. I have been out of the office for 16 years. If after 18 years when those turbines had been ordered, five have still not been installed, what are you talking about?”

He said his administration did all it could do in the sector he left office, adding that it is still struggling with 4,000 megawatts since he left office.

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