Plans by the Nigerian National Petroleum Company Limited (NNPCL) to revive ageing refineries through technical partnerships have come under renewed scrutiny after former President Olusegun Obasanjo said the facilities “will never work.”
The intervention comes at a critical point in the government’s downstream strategy, with NNPC targeting June 2026 to finalise the selection of private operators for the Port Harcourt, Warri, and Kaduna refineries; facilities that have absorbed billions of dollars in rehabilitation spending but remain largely non-operational.
Speaking during a televised interview, Obasanjo questioned the viability of public-sector-led refinery management, drawing comparisons with more successful public-private partnership models.
“One of the lessons that I learnt is that PPP (public-private partnership) works. Look, one project that has not been destroyed by the government in Nigeria is the NLNG (Nigeria Liquefied Natural Gas), where the private sector has 51 per cent, and the Nigerian government has 49 per cent.
“See what we did with Nigerian railways. See what we did with the national shipping company. See what we are doing now, even with the NNPC. The NNPC has refineries, and I said to people that it will never work. And a man had the audacity to say, ‘Am I a chemical engineer?”
The former president disclosed that during his administration, he made multiple attempts to attract Shell to manage the refineries under a private-sector framework, including offering equity participation.
“Look, when I was there, I called Shell. I said, ‘Look, please, I beg you, come and take 10 per cent equity and run the refinery for us.’ They said no. I said, ‘Okay, if you don’t want to take equity, don’t take equity. Come and run the refineries. They said no,” he stated.
According to Obasanjo, discussions with the oil major revealed fundamental structural constraints limiting investor interest in Nigeria’s refining segment.
“So, I called him, and I said, ‘Tell me, be honest with me. Why don’t you want to handle this?’ He said first, they want to let me know that they make most of their profits on the upstream, not the downstream.
He said they run their downstream without making a loss, but they don’t make a lot of profit from it. It’s more of a service than a major profit-making. So that’s number one.
“Number two: he said our refineries are too small. This was when I was an elected President. He said our refineries are too small. One is 60,000 barrels, and another is 100,000 barrels. He said refineries at that time were in the range of 250,000 barrels to 300,000 barrels. Number three: he said our refineries are not well-maintained. We call quacks and amateurs to come and maintain our refineries. The refineries are not in good order. He said, ‘Number four, there’s too much corruption around our refineries, and they don’t want to be part of that,” Obansanjo explained.
In a pivotal moment, Obasanjo said a deal was reached with Aliko Dangote to acquire a controlling stake in two of the refineries, a transaction he described as a breakthrough at the time.
“Until one day, Aliko (Dangote) came and offered $750m to take two of the refineries; that will be 51 per cent. I said, ‘Wow, God, you are really a God of miracles.’ I told Aliko to bring the money quickly. They brought the money, and they paid,” he said.
However, the agreement was later reversed under the administration of Umaru Musa Yar’Adua following pressure from within the national oil company.
“When I left office, NNPC went to my successor and convinced him. So I got up. I went to Umar. I said, ‘Look, Umar, maybe you don’t know; this is why we did what we did.’ He said, ‘Well, NNPC came to me.’ I said, ‘But you know that NNPC cannot run this thing. He said he knew. I asked, ‘Then why did you give in? He said because of pressure. And I said, ‘Look, when you sell these refineries, you will not get 200 million (dollars) for them, because you will sell them as scrap.’
“Only the present NNPC head has told the country the truth. But in the meantime, I was told that they have spent about $16bn, which is only $4bn short of what Aliko used to build Africa’s largest refinery,” Obasanjo said.
Recent disclosures by NNPC leadership reinforce concerns about operational viability. The Group Chief Executive Officer, Bayo Ojulari, acknowledged that despite rehabilitation efforts and brief reopening attempts in 2024, the refineries were operating “well below international standards,” rendering their output commercially uncompetitive.
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