At last there is good news from the Nigerian National Petroleum Company Limited (NNPCL) on the management of Nigeria’s four refineries.
It has finally opted for the suggestion made decades ago by eminent economy watchers.
The company now wants private partnership in refinery management and has called for bids from reputable and experienced firms in the industry for the running of Warri and Kaduna refineries. Port Harcourt Refinery was earlier placed on offer.
For decades now, experienced industry watchers had called on the NNPCL to either sell the refineries or give them to reputable firms in the industry to manage. The company insisted on managing the plants despite the indisputable fact that management of the four refineries was too burdensome to be added to NNPCL’s busy schedule.
Kaduna Refinery has not refined a barrel of crude oil in the last 10 years. Ironically its idle workers collect their jumbo monthly pays before some productive civil servants are paid.
Port Harcourt Refinery has been dormant for more than five years.
Strangely enough, it spends billions of naira annually on staff emolument even as it cannot produce a liter of refined petroleum product.
The recent decision by NNPCL to seek private sector partnership for the management and maintenance of the refineries is a sad reminder of the grievous decision by the late President Umaru Musa Yar’Adua in 2007 on the sale of the refineries.
The late president terminated the sale of Port Harcourt and Kaduna Refineries to a company floated by Aliko Dangote, chief executive of the Dangote conglomerate.
Former President Olusegun Obasanjo had sold 51 per cent of Port Harcourt Refinery to the company at $561 million, while Kaduna was sold a week later to the same company.
Yar’Adua terminated the sale under pressure from selfish workers unions and greedy politicians on claims that they were sold to Obasanjo’s allies.
If that sale was allowed, the private company would have managed the refineries efficiently and saved Nigeria the agony of total dependence on refined petroleum products imports.
The transaction had only given the purchasing company a total of 51 per cent of the shares of the refineries while government was to keep 49 per cent. That would have given government enough seats on the boards of the refineries and consequently the ability to influence the running of the refineries.
Yar’Adua’s decision to terminate the sale was short-sighted and catastrophic. It has inflicted untold hardship on millions of Nigerians today.
Years of redundancy despite billions of dollars sunk into rehabilitation projects and dependence on imported refined petroleum products have proved that private investors would do a better job in managing the refineries.
In 2021, the federal government spent $1.5 billion on the rehabilitation of Port Harcourt Refinery. The huge sum failed to bring the refinery back on stream.
Since the commencement of the current rehabilitation of the refinery, it has missed at least eight deadlines for the resumption of refining business.
Earlier plans for the Port Harcourt Refinery to commence production by the middle of August did not materialise. Meanwhile, the commencement of refining process by Warri Refinery which was earlier set for the end of 2024 has now been shifted to the second half of 2025. The series of procrastinations of resumption deadlines are strong indications that private investors are needed in the management of the refineries.
Heineken Lokpobiri, Nigeria’s minister of state for petroleum (oil), has been sufficiently embarrassed by the recurring decimal of failed resumption deadlines. On several occasions, Lokpobiri would be briefed on a deadline for the commencement of refining work in Port Harcourt Refinery.
The minister would announce the date to the public with excitement only to be embarrassed as the deadline arrives while the refinery remains dormant.
Now that NNPCL has finally seen the need for private investors to manage and maintain the refineries, Blueprint commends the company’s brinkmanship and enjoins it to adhere strictly to the guidelines set for the selection of a company to manage the refineries.
Among the basic requirements for bidding for the concession is that the company must be registered with the Corporate Affairs Commission (CAC) and must have recorded a minimum annual turnover of $2 billion.
If that requirement is strictly followed in the selection of a company to manage the refineries, Nigeria stands to benefit from improved refining capacity that the coming on stream of the refineries would facilitate.
We encourage NNPCL to pursue the new line of management thinking for the refineries to a logical conclusion.
We need the four refineries to come on stream and challenge the monopoly of the industry by Dangote Refinery. Only private sector management of the refineries can achieve that.
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