Nigeria's Costly Refinery Obsession: Revival Promises Clash with Decades of Failure

Nigeria's President Bola Tinubu has reiterated his administration's commitment to bringing the nation's moribund state-owned oil refineries back to productive operation. Speaking to leaders of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), Tinubu acknowledged that the refineries' current state of producing only "flame and smoke" is insufficient, emphasizing the need for profitability and value delivery. He promised a comprehensive approach involving research, restructuring, and a fundamental reset before operations resume.

However, this renewed pledge faces skepticism given Nigeria's long history of failed attempts to revive these critical assets. The country owns four refineries: two in Port Harcourt, one in Warri, and one in Kaduna, with a total installed capacity of 445,000 barrels per day. Despite successive rehabilitation programs and staggering expenditures, including approximately $1.4 billion approved for the Port Harcourt refinery in 2021 alone, and hundreds of millions for Warri and Kaduna, these facilities have consistently failed to operate sustainably.

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are going to come back to work

The persistent underperformance raises fundamental questions about Nigeria's strategy. Critics and industry associations, like the Petroleum Products Retail Outlets Owners Association of Nigeria, argue that continued government-led revival efforts are an expensive refusal to accept reality. They advocate for privatization, asserting that it would attract private capital and expertise, improve efficiency, and foster competition, thereby eliminating recurrent fiscal burdens.

Some, like Muda Yusuf, founder of the Centre for the Promotion of Private Enterprise, suggest a more measured approach. He proposes completing ongoing rehabilitation work while simultaneously developing a framework for private sector participation. This perspective acknowledges the sunk costs but seeks a path that integrates private sector efficiency to salvage the investments and achieve the desired refining capacity.

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flame and smoke