NNPC refineries: Albatross of a nation

Nigeria's downstream oil sector is once again at a crossroads, with the Nigerian National Petroleum Company Limited (NNPC) announcing a new bid to rehabilitate the nation's four chronically underperforming state-owned refineries. This initiative, however, is met with deep skepticism, particularly following former President Olusegun Obasanjo's assertion that these refineries would 'never work again.' The timing of the NNPC's MoUs with Sanjiang Chemical Company Limited and Xinganchen (Fuzhou) Industrial Park Operation and Management Co., Ltd. for a Technical Equity Partnership is striking, occurring just as Obasanjo voiced his doubts.

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the four state-owned refineries would never work again

These refineries, with a combined nameplate capacity of 445,000 barrels per day, have been non-operational for approximately three decades. Despite numerous expensive 'turnaround maintenance' (TAM) exercises undertaken by successive administrations, they have consistently failed to yield results, earning them the moniker 'national albatross.' This persistent failure forces Nigeria, a leading crude oil producer, to shamefully depend on costly refined fuel imports, a stark contrast to countries like Singapore which, despite lower crude production, thrives as a major refining hub.

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Shell declined, Obasanjo said. The former president said the oil major cited the low capacity of the refineries, official sleaze and its preference for the upstream sector.

From The PUNCH's perspective, and indeed for many Nigerians, this situation represents a tragic cycle of mismanagement and missed opportunities. Obasanjo’s recounting of Shell’s refusal to manage the refineries due to their low capacity and official sleaze is particularly telling. The article highlights the illogical reversal of privatization efforts by a former president, leading to Nigeria repaying over $1 billion for contract violations. The failure to privatize these refineries under subsequent administrations, despite the immense economic burden of fuel importation and subsidies—estimated at N11 trillion during Buhari's tenure alone—suggests powerful vested interests may be perpetuating the status quo.

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Nigeria’s refineries, with a nameplate capacity of 445,000 barrels per day, have been down for decades despite the obtuse and expensive turnaround maintenance undertaken by successive federal administrations.

The Tinubu administration, with its perceived private sector orientation, had raised hopes for a swift sale of these refineries. However, the continued pumping of funds into TAM without tangible results, coupled with the NNPC's latest partnership, indicates that the path to functional domestic refining remains obstructed. This ongoing saga is not just an economic drain; it's a symbol of governance challenges that continue to plague a nation blessed with abundant natural resources.

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This is a national albatross.