The Nigerian National Petroleum Company Limited stands at a pivotal crossroads. Under new CEO Bayo Ojulari, the corporation is conducting a strategic review of its long-dormant Port Harcourt, Warri, and Kaduna refineries that could culminate in their full privatization – a potential watershed moment for Nigeria’s energy security. This review, prompted by decades of operational failures despite over $18 billion in rehabilitation investments, challenges Nigeria’s longstanding dependence on publicly managed refineries. With the Dangote Refinery now operational and public frustration mounting, Ojulari’s admission that “sale is not out of the question” signals a fundamental policy shift toward private sector-led refining.
Breaking News: NNPC CEO Confirms Privatization on the Table
Group Chief Executive Officer Bayo Ojulari made a significant announcement at the July 2025 OPEC International Seminar in Vienna: NNPCL is formally considering selling the country’s non-performing refineries as part of a comprehensive strategic review. Ojulari revealed that the review of downstream operations will conclude by December 2025 and explicitly confirmed that divestment is a viable option being evaluated. This marks a dramatic departure from decades of state ownership dogma in Nigeria’s petroleum sector.
The NNPC boss candidly acknowledged severe technical complications despite massive investments, describing the rehabilitation of “very old refinery[s] abandoned for some time” as “becoming a little bit more complicated” than anticipated. This stance represents a striking contrast to former GCEO Mele Kyari’s November 2024 declaration that the Port Harcourt refinery had “commenced operations” – a claim undermined when the facility shut down just six months later for maintenance, exposing persistent reliability issues that have plagued these assets for generations.
Decades of Decline: The Tortured History of Nigeria’s Refineries
A Timeline of Failed Promises
Nigeria’s refinery saga represents one of Africa’s most costly infrastructure failures. Commissioned with great promise – Warri in 1978, Kaduna in 1980, and Port Harcourt in 1989 – these facilities launched with combined capacity of 445,000 barrels per day meant to achieve national fuel self-sufficiency. Instead, they became monuments to inefficiency, operating below 30% capacity for over 40 years despite consuming approximately $25 billion in maintenance allocations between 2013-2023 alone.
The rehabilitation efforts themselves became a source of national frustration: $1.4 billion approved for Port Harcourt in 2021, $897 million earmarked for Warri, and $586 million allocated to Kaduna. At one point, N100 billion was reportedly spent monthly in 2021 on refinery rehabilitation with nothing to show for this colossal expenditure. The pattern became predictable: massive cash injections followed by temporary restarts and inevitable shutdowns.
The Dangote-Obasanjo Revelations
The history contains a pivotal “what if” moment from 2007, when Aliko Dangote paid $750 million for the refineries under President Obasanjo, only to have successor Yar’Adua reverse the deal after NNPC officials claimed they could operate them profitably. Dangote recently revealed the staggering cost of this reversal: “They said they just gave them to us as a parting gift… And as of today, they have spent about $18 billion on those refineries, and they are still not working. And I doubt very much if they will ever work.”
Former President Obasanjo has corroborated this account, adding that international oil companies like Shell had previously refused to operate the facilities when approached, knowing their operational impossibility. Obasanjo lamented the situation, noting that “those people should be in jail” for misleading the nation about the refineries’ viability while corruption flourished within NNPC.
| Refinery | Age (Years) | Capacity (bpd) | Current Status | Investment Since 2021 |
|---|---|---|---|---|
| Port Harcourt | 36 | 210,000 | Shut down since May 2025 | $1.5 billion |
| Warri | 47 | 125,000 | Rehabilitation paused | $897 million |
| Kaduna | 45 | 110,000 | Non-operational | $586 million |
| TOTAL | Avg: 43 | 445,000 | 0% utilization | ~$3 billion |
Technical and Economic Challenges Driving Privatization
The “Aging Infrastructure” Quagmire
The core technical challenge is brutally simple: these refineries are technologically obsolete beyond redemption. Dangote offered a vivid analogy, likening rehabilitation efforts to “modernizing a 40-year-old car – even with a new engine, the body can’t handle the shock of that new technology engine.” This fundamental mismatch between aging infrastructure and modern refining requirements has doomed every attempted revival.
Compounding these technical challenges are massive security overheads. Ojulari revealed that NNPC’s operating costs range between $25-$30 per barrel – dramatically higher than the global average of $10-$15 – largely due to enormous pipeline security investments. While Ojulari touted improved “pipeline availability” through community-based security partnerships, these measures have merely contained rather than solved the fundamental economic disadvantage of operating decaying infrastructure in challenging environments.
Economic Drain vs. Dangote’s Success
The economic consequences of this refining failure are staggering. Nigeria spends $10-15 billion annually importing refined fuel due to domestic refining gaps – a devastating drain on foreign reserves that has undermined the naira and constrained economic growth for decades. This occurs while Nigeria remains Africa’s largest crude oil producer, exporting raw materials only to import finished products at premium prices.
The contrast with the privately-funded Dangote Refinery could not be more striking. Dangote’s facility dedicates over 50% of its output to Premium Motor Spirit (petrol), while the state refineries historically managed just 22% PMS yield. This configuration difference highlights how Dangote designed for market needs while state refineries remained locked in outdated operational paradigms. The Dangote facility stands as living proof that private capital and expertise can succeed where state ownership has catastrophically failed.
The Privatization Debate: Pathways and Controversies
Viable Divestment Models
As privatization moves from theoretical to probable, several models are emerging. The Manufacturers Association of Nigeria advocates for a full asset sale, arguing the refineries represent an unacceptable “drain on the economy” that must be transferred to private operators “as-is.” This approach would provide immediate fiscal relief but likely at fire-sale prices after decades of value destruction.
A transitional approach emerged in NNPC’s August 2024 tender for private Operations & Maintenance partners specifically for Warri and Kaduna refineries. This O&M concession model would maintain nominal NNPC ownership while transferring operational control – similar to the Nigeria LNG structure that has proven successful. Some industry voices propose a more radical “scrap-and-replace” approach, suggesting the government should sell the plants for scrap metal and use proceeds to fund modern modular refineries better suited to Nigeria’s current needs.
Criticism of Current Approach
Former Vice President Atiku Abubakar has sharply criticized the potential sequence of events, questioning why NNPC would spend “$1.5 billion loans for rehabilitation” only to privatize immediately after. His solution: “Sell BEFORE rehabilitation to avoid debt burden” – recognizing that private operators would more efficiently determine whether rehabilitation makes economic sense.
Transparency concerns also loom large. Civil society groups question how O&M partners or buyers would be selected given NNPC’s history of opaque contracting. The Centre for Promotion of Private Enterprise emphasized that fundamental business model change through privatization is essential, cautioning that “if the business model remains as it is, there is no way it can work.”
Three Potential Futures for Nigeria’s Refining Sector
The Full Privatization Scenario represents the most probable outcome, where NNPC sells refineries to international operators like Vitol or Trafigura, possibly in consortiums with Nigerian equity participation. This approach would immediately end the fiscal drain while attracting new investment and expertise, but would require massive asset write-downs after $18+ billion spent and would likely provoke political backlash over “selling family silver.”
The Hybrid Public-Private Model offers a compromise through long-term O&M leases with profit-sharing mechanisms. This would retain symbolic NNPC ownership while securing private operational expertise, potentially easing political opposition. However, this approach risks perpetuating the blurred accountability that has plagued previous reform attempts.
The Status Quo “Rehabilitation Trap” remains the nightmare scenario Nigeria must avoid. Continued cycles of repairs and shutdowns have been deemed unsustainable by both Ojulari and Dangote. The Oil and Gas Service Providers Association of Nigeria bluntly declared that state refineries “will die naturally” as they cannot compete with Dangote’s efficiency, while Professor Wumi Iledare cautions that the final decision rests properly with the NNPCL Board based on comprehensive governance considerations beyond pure economics.
The Privatization Imperative
The NNPC refinery privatization debate transcends economics – it represents a referendum on Nigeria’s governance model for strategic assets. As CEO Ojulari’s December 2025 review deadline approaches, certain realities have become undeniable: $18 billion in rehabilitation funds failed to produce functional refineries under state management; Dangote’s Lekki refinery proves private capital and expertise can deliver operational excellence where the state has consistently failed; and continued public ownership risks further draining foreign reserves through preventable fuel imports.
The era of state-run refining appears terminally untenable. Ojulari’s willingness to consider divestment – once political heresy in Nigeria’s oil sector – may finally catalyze the transition from a fuel-importing nation to an African refining powerhouse. The critical question is no longer whether privatization should occur, but how it will be structured. A transparent, competitive process could launch Nigeria’s energy renaissance, while an opaque, politically-compromised approach would merely write another chapter in a tragic cycle of waste. Nigeria stands at an energy crossroads, and the path chosen will resonate for generations.
