Urgent Need for Privatisation
The recent push by the Bayo Ojulari-led NNPC management to explore privatising Nigeria’s three state-owned refineries—Port Harcourt, Kaduna, and Warri—is a critical and long-overdue step. These facilities, though legally structured as independent entities under state ownership, are effectively defunct: financially insolvent, operationally dormant, and structurally beyond repair.
Structural and Financial Failures
Decades of neglect, corrosion, and environmental degradation have compromised their operational integrity. More fundamentally, these refineries were never designed for financial viability. Lacking proper profit-and-loss accountability and liquidity, they have drained national resources without delivering value. Nigeria has spent approximately $3 billion in recent years on these three refineries, with no meaningful output beyond temporary publicity. Since 2008, around $18 billion has been sunk into rehabilitation, salaries, and operational costs nationwide, yielding negligible results. In stark contrast, Nigeria’s 49% stake in the Nigeria Liquefied Natural Gas (NLNG) project stands as a model of success—profitable, dividend-generating, and disciplined by private-sector efficiency.
Legal Framework for Privatising Nigeria’s State-Owned Refineries
Legal expert Femi Falana, SAN, has rightly noted that NNPC alone cannot sell these refineries. However, under the Petroleum Industry Act (PIA), NNPC Limited, alongside the Ministry of Finance Incorporated (MOFI) and the Ministry of Petroleum, can engage the National Council on Privatisation and Commercialisation (NCPC) through the Bureau of Public Enterprises (BPE) to execute a transparent sale or liquidation. Unless the NCPC Act has been amended to exclude NNPC subsidiaries—and there’s no evidence it has—this pathway remains legally sound.
NNPC Group CEO Bayo Ojulari’s indication that privatisation remains an option signals a pragmatic acknowledgment of reality. Years of rehabilitation attempts have produced minimal returns, with imported components often incompatible with outdated infrastructure. Even if revived, these refineries would struggle to operate efficiently or compete with modern facilities like the Dangote Refinery. Industry experts agree that privatisation offers a legal and practical exit from these loss-making ventures.
Economically, privatisation is not just feasible but necessary. Unlike joint ventures, which burden NNPC with costly cash calls, full divestment could unlock immediate revenue, ease budget constraints, and free up capital for exploration or other priorities. The NLNG model suggests that a smaller equity stake—perhaps 20%—with a capable private partner is far more valuable than full ownership of failing assets.
Privatisation Push: Industry Support and Nigeria’s Economic Shift
Support for privatisation now extends beyond policy circles. The Manufacturers Association of Nigeria (MAN), petroleum marketers, and the broader Organised Private Sector (OPS) advocate for a fully privatised downstream oil sector to end inefficiency and import reliance. Successful examples, such as the Eleme Petrochemicals plant and the emerging impact of the Dangote Refinery, reinforce their case.
The Dangote Refinery, with its 650,000-barrel-per-day capacity, will help reduce fuel shortages and import costs, but it is not a complete solution. Nigeria must shift from operating businesses to regulating them. The government’s track record with state-owned enterprises—spanning aluminium, fertilisers, airlines, and more—reveals a pattern of inefficiency and waste. The collapse of sectors like textiles due to policy neglect underscores the need for a new economic model driven by human capital, digital innovation, agriculture, and marine economies, rather than oil dependency.
The Tinubu administration must act decisively, empowering the Ojulari-led NNPC to make tough, pragmatic decisions. This includes supporting the EFCC and international auditors to probe the billions spent on NNPC, PPMC, and refinery subsidiaries over the past decade. The urgency is not just economic but political. Nigeria cannot afford to squander this opportunity for reform.