Nigeria's FG advised against further spending on idle refineries

An energy expert has strongly advised the Federal Government of Nigeria to cease committing further public funds to the rehabilitation of its idle refineries. The warning comes amid concerns that continued spending without a clear commercial justification could exacerbate the country's financial losses. This advice follows President Bola Tinubu's recent assurance that the government-owned Port Harcourt, Warri, and Kaduna refineries would soon resume operations.

President Tinubu had stated that his administration was undertaking a "firm reset and structural reworking" of these facilities to ensure profitability and deliver value to Nigerians. However, energy expert Dan Kunle, in an open letter to the president, questioned the logic behind pouring more money into these refineries. He argued that the government should first thoroughly investigate the reasons for previous rehabilitation programs' failures and account for the vast sums already spent.

Nigeria's state-owned refineries have a combined installed capacity of approximately 445,000 barrels per day but have remained largely moribund for years. Despite billions invested in "turnaround maintenance," they have failed to operate effectively. Records indicate that the Federal Executive Council approved around $1.5 billion for the Port Harcourt refinery rehabilitation in 2021, with an additional $1.484 billion approved for the Warri and Kaduna refineries in the same year, totaling nearly $3 billion in major rehabilitation approvals alone.

Kunle highlighted that these figures represent only a portion of the total funds committed over the years. He cited a House of Representatives record showing that the three refinery companies incurred approximately N4.8 trillion in operating costs between 2010 and 2020, accumulating losses of about N366.5 billion. Further reports indicate substantial amounts spent on rehabilitation projects and cumulative allocations for refinery renovation, raising serious questions about the efficacy and transparency of these investments. Kunle emphasized the need for forensic accounting to reconcile these figures before any further expenditure.