ABUJA, Feb 5 – Nigeria’s state-owned refineries have been shut down after internal assessments by the Nigerian National Petroleum Company Limited revealed that the facilities were operating at severe losses and destroying long-term economic value, the company’s chief executive said.
Speaking during a fireside chat at the Nigeria International Energy Summit in Abuja, NNPC Group Chief Executive Officer Bashir Ojulari said the decision followed an extensive technical and commercial review triggered by mounting public frustration over years of heavy investment with limited results.
Ojulari said refinery rehabilitation became an immediate focus when his management team assumed office, given the intense public scrutiny surrounding the facilities. However, the review concluded that continued operations would amount to sustained value destruction.
According to Ojulari, average capacity utilisation across the refineries hovered between 50% and 55%, even as operating expenses and contractor costs continued to rise. Despite regular crude supply, the plants produced mid-grade petroleum products whose market value failed to justify the cost and quality of the crude processed.
He said the analysis showed no credible route to profitability, warning that maintaining the existing trajectory could have locked Nigeria into decades of losses.
Nigeria’s refineries in Port Harcourt, Warri and Kaduna have long struggled with chronic underperformance despite repeated turnaround maintenance programmes and billions of naira in public spending. Ojulari noted that successive administrations focused heavily on financing and engineering contracts, often neglecting long-term operational sustainability.
This approach, he said, created layers of contractors who extracted value without accountability for consistent performance, leaving the assets economically weakened even during periods of operation.
Ojulari added that the refineries’ challenges were compounded by structural flaws in contract design, where engineering, procurement, construction, and maintenance arrangements lacked incentives tied to long-term asset performance. As a result, the facilities eroded value rather than generating returns.
Looking ahead, NNPC plans to move away from contractor-led refinery operations toward an equity partnership model involving experienced international operators. Under the proposed structure, partners would take ownership stakes, manage day-to-day operations, and help rebuild domestic technical capacity within Nigeria’s downstream sector.
Ojulari said the strategy is aimed at achieving commercial sustainability rather than divesting national assets. Discussions are already underway with prospective investors, including a major Chinese petrochemical firm, with site inspections expected in the coming months.
He also acknowledged the role of the Dangote Refinery in easing pressure on Nigeria’s energy system, describing its entry as both timely and strategically important. The privately owned facility, he said, has given NNPC greater flexibility to take economically sound decisions without the urgency previously imposed by domestic fuel shortages.
