By Gideon Osaka
Nigeria’s refineries were once critical to national fuel sufficiency and proud symbols of national industrial capability. But today, those very refineries may belong more to history than to future hope.
In July 2025, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC Ltd), Bayo Ojulari, confirmed the doubt by Africa’s richest man, Alhaji Aliko Dangote, that the Port Harcourt, Warri, and Kaduna refineries may never work again. Dangote, the President of the Dangote Group, stated a few days ago that the refineries might not resume operations, despite having invested approximately $18 billion.
Dangote emphasised that the turnaround maintenance of the refineries was like trying to modernise a car built 40 years ago, when technology has advanced. Dangote’s comment also buttressed Obasanjo’s position last year about the refineries, two of which were shut down again after they were declared operational by the former NNPC Group Managing Director, Mele Kyari, in Q4 2024.
Obasanjo had stated that the NNPC was aware that it could not operate the refineries, saying international oil companies like Shell once refused to run the facilities when he requested them to do so.
Ojulari, while echoing Dangote’s sentiment in an interview with Bloomberg in Vienna, Austria, stated that the country had invested heavily in the refineries without seeing any tangible results.
The NNPC chief’s stance was in sharp contrast with that of his predecessor, who told Nigerians in November 2024 that all the refineries would resume full operations.
“We’re reviewing all our refinery strategies now. We hope that by the end of the year, we’ll be able to conclude that review. That review may lead to us doing things slightly differently,” he stated.
Asked if that could include selling off the refineries, Ojulari said, “What we’re saying is that sale is not out of the question. All the options are on the table, to be frank, but that decision will be based on the outcome of the reviews we’re doing now.”
Like Dangote, Ojulari attributed some of the setbacks to outdated infrastructure and underperforming technologies. “On refineries, we made quite a lot of investment over the last several years and brought in a lot of technologies, but we’ve been challenged.
“Some of those technologies have not worked as we expected so far. But also, as you know, when you’re refining a very old refinery that has been abandoned for some time, what we’re finding is that it’s becoming a little bit more complicated,” he said.
Calls for the privatisation of the government-owned refineries, under the management of NNPC, intensified following the recent shutdown of the 60,000 barrels-per-day old Port Harcourt refinery, six months after it was declared operational. The Warri refinery was also shut down one month after the former GCEO of the NNPC, Mele Kyari, declared it open in December.
With mounting evidence and rising expert consensus, all signs point to NNPC Ltd needing to sell these assets once and for all.
A heritage of loss and drain
The state-owned refineries, including two units in Port Harcourt (with a combined capacity of ~210,000 bpd), the Warri refinery (125,000 bpd), and the Kaduna facility (110,000 bpd), were once critical to national fuel sufficiency. Instead, they now serve as significant economic anchors weighing on NNPC’s balance sheet. Media reports reveal that approximately $1.5 billion was allocated to Port Harcourt in 2021, $897 million to Warri, and $586 million to Kaduna. Yet, within months of being declared operational—Warri in December 2024, and Port Harcourt soon after —both shut down again due to persistent technical and safety failures.
Dangote’s blunt commentary offered a sharp metaphor: attempting to modernise those refineries is like fitting a modern engine into a forty year old chassis. Even with new parts, the old framework cannot bear the strain. Obasanjo offered corroboration, recounting how Shell executives refused intake of the assets decades ago, citing small size, poor maintenance and entrenched corruption—even as Dangote had offered to take control via PPP.
According to Punch, over $2 billion had been “squandered” on turnaround work with no meaningful output. Experts like Dr. Muda Yusuf of the Centre for Promotion of Private Enterprise (CPPE) say that unless the model changes fundamentally—through privatisation—more public funds would only perpetuate waste with negligible results.
Structural constraints beyond repair
Behind the repeated failures lies more than poor oversight. Nigeria’s refineries are ageing, technologically obsolete and poorly matched to Nigerian crude. The Kaduna plant must import heavier crude to operate efficiently, as local light crude is incompatible with the refinery’s design. Local production is frequently disrupted by oil theft, estimated at roughly 300,000 barrels per day, which costs Nigeria N1.29 trillion annually, according to the House Defence Committee investigation, further straining feedstock supply.
Additionally, corruption and political interference persist. Energy analysts argue that NNPC’s inability to engage competent private partners worsened the problem. Obasanjo’s claims that PPP offers from Dangote and others were rebuffed for internal political convenience highlight institutional resistance to reform.
No firepower left to compete
Industry voices have grown unanimous. Dr. Muda Yusuf of the CPPE argues that even billions spent since Buhari’s reforms could have been used to fund modular refineries or new facilities, rather than perpetuating costly projects with no returns. He urges that “refinery business ordinarily should just be left to the private sector… the amount of government resources wasted… is mind-boggling”.
Mazi Colman Obasi, President of OGSPAN, is equally forthright: “The NNPCL refineries will die naturally.” He points to the overwhelming competitive edge possessed by Dangote’s privately operated refinery, which, at peak, can meet Nigeria’s entire domestic fuel demand and questions the rationale of maintaining dysfunctional state assets.
Academic voices, such as Professor Wumi Iladere, caution that any final decision must lie with the NNPC Board and follow established governance protocols. Nonetheless, he signals that absent structural reform, the status quo is untenable.
Refocusing capital toward efficient models
Every dollar lost in sustaining unproductive refineries represents forgone investment in modern, modular and scalable infrastructure. Modular refineries capable of processing 10,000–30,000 barrels per day (bpd) are emerging across the Niger Delta, but they struggle to secure crude supply and regulatory support. The country’s $18 billion sunk cost could have financed dozens of modules or new builds with immediate ROI and environmental benefits.
Instead, NNPC’s equipment and staffing overhead continue to bleed funds with almost zero yields. From a macroeconomic perspective, maintaining non-performing assets in a sector characterised by low output, high debt burdens, and mounting infrastructure liabilities is a drag on growth.
Privatisation or strategic sale to competent operators could unlock capital, reduce debt exposure, shrink wage bills (NNPC still employs over 5,700 staff in refinery operations), and allow Nigeria to focus on regulation rather than inefficient operation.
Risks and rewards of selling
Selling the refineries would yield immediate fiscal relief for NNPC, eliminate recurring subsidy requirements, accelerate access to crude by modular refineries, and better align with global oil trends. It would also affirm Nigeria’s commitment to structural reform under the Petroleum Industry Act, a transformation architecture already in place.
However, the risks involve political backlash, resistance from vested interests within NNPC and government, and the challenge of valuing these assets realistically. Market appetite may be limited for depreciated, obsolete plants unless buyers receive concessions or guarantees.
Even Obasanjo conceded that the assets today may be worth little more than scrap—he warned they might fetch less than $200 million if sold in their current state, reinforcing the urgency of action before depreciation deepens further.
In view of this, an effective strategy would begin with concluding NNPC’s refinery strategy review before year-end, as Ojulari pledged, followed by a transparent public bidding process for sale or PPP partnerships. To preserve value, competitive private investors should be invited, with strict performance bonds and modernisation plans.
Simultaneously, Nigeria must accelerate its support for modular refineries and the Dangote model, ensuring stable feedstock supply, favourable pricing in Naira, and integrated deregulation. The Petroleum Industry Act provides the legal framework for demarcating regulatory and commercial actors and must be implemented decisively.
Environmental legacy remediation should be separated from the sale process: NNPC must commit to offloading oil-polluted liabilities while freeing the assets for productive use.
Perhaps most critically, the government must reaffirm that refinery ownership is not a symbol of sovereignty if it fails national service. Profit-generating, efficient systems driven by private capital are more aligned with Nigeria’s future than symbolic, consistently bankrupt state-run plants.
The story of Nigeria’s referees is not just about engineering failure—it is about governance, opportunity cost, and institutional paralysis. Dangote’s refinery is not just a competitor, but a symbol that functional modern refining is possible in Nigeria. The relics that sit idle in Port Harcourt, Warri, and Kaduna, by contrast, are reminders of repeated public misinvestment.
When the NNPC CEO confirmed that “sale is not out of the question,” he did more than open a policy window—he acknowledged what many Nigerians have known for years: these refineries are legacy burdens, not assets. With experts, politicians, and former presidents now aligned in their view, the time has come: Nigeria must divest and redeploy its scarce capital into efficient infrastructure, ensuring that energy assets serve the people, not politics.
To save them from their heritage, NNPC must sell the refineries—not as defeat, but as a pivot toward productivity.
