NNPC refineries may never work again — Dangote

 

Africa’s richest man, Aliko Dangote, has stirred fresh debate about Nigeria’s struggling oil refining industry by declaring that the country’s state-owned refineries may never function properly again despite decades of huge spending on turnaround maintenance. Dangote, whose new mega-refinery in Lagos has begun producing refined petroleum products, made the statement during a recent meeting with business leaders and journalists at the Dangote Refinery complex in Lekki.

The business mogul, who built the world’s largest single-train refinery with a capacity of 650,000 barrels per day, pointed out that Nigeria has spent billions of dollars trying to revive the refineries in Port Harcourt, Warri, and Kaduna, but with little to show for it. He described the government’s efforts as pouring money into old, outdated facilities that can no longer deliver value in today’s energy landscape.

For decades, the three refineries owned by the Nigerian National Petroleum Company Limited (NNPC) have remained mostly idle or operated far below installed capacity, making the country almost entirely dependent on imported refined petroleum products despite being Africa’s largest crude oil producer. This dependency has cost Nigeria enormous sums in fuel subsidies and import bills, straining public finances and worsening foreign exchange pressures.

Dangote recalled that in 2007, under President Olusegun Obasanjo, his group reached an agreement to acquire the state refineries and turn them around but the deal was reversed by the late President Umaru Musa Yar’Adua’s administration. According to him, if the sale had gone ahead back then, Nigeria would have long solved its refining challenges and saved billions of dollars that have instead been wasted on repeated and mostly unsuccessful rehabilitation projects.

He also highlighted how global oil majors like Shell once declined to run Nigeria’s refineries, describing them as inefficient and difficult to upgrade to modern standards. In his words, attempting to modernise the plants now is like trying to fix an ancient car that has seen its best days — even if you change the engine, the body may no longer cope with the demands of modern performance.

In recent years, the Nigerian government has made fresh attempts to revamp the plants. In 2021, the government announced a \$1.5 billion rehabilitation project for the Port Harcourt refinery, along with significant funds for Warri and Kaduna as well. Yet, deadlines have been missed repeatedly and the facilities are still not supplying refined petrol and diesel to the local market at any meaningful scale.

Meanwhile, Dangote’s refinery has begun rolling out products for the Nigerian market and is expected to meet a significant share of local demand for petrol, diesel, aviation fuel and other by-products. The refinery’s commissioning is widely seen as a potential game changer that could end Nigeria’s decades-old reliance on imported fuel.

Industry watchers say Dangote’s statement underscores what many have long feared — that the country’s public refineries may be beyond economic repair. Energy economists argue that while the plants could theoretically be revived, the cost of doing so is now so high that it would make more sense for the government to sell them off or allow private investors to build new modular refineries instead.

Some stakeholders argue that the funds sunk into the government-owned refineries could have been channelled into creating an enabling environment for private refiners like Dangote to thrive sooner. They point to the fact that even after decades of operation, the NNPC’s plants have never operated at full capacity for any sustained period. Issues like pipeline vandalism, mismanagement, outdated equipment and lack of political will have dogged the plants for years.

Labour unions, however, have often opposed privatisation of the refineries, arguing that public ownership guarantees national energy security and protects jobs. They have also accused successive administrations of deliberately mismanaging the refineries to justify selling them off cheaply. But analysts say that regardless of the politics, the reality is that Nigeria cannot continue to burn scarce public resources on facilities that fail to deliver.

The emergence of the Dangote Refinery — the largest in Africa and one of the biggest in the world — has shifted the conversation. With a capacity larger than the combined capacity of all three government refineries, the plant is expected to supply enough petrol and diesel to meet local needs and even export to neighbouring countries. Dangote has already started distributing diesel and jet fuel and plans to ramp up petrol production over the coming months.

The NNPC itself owns a minority stake in the Dangote Refinery, signalling its recognition of the importance of private investment in solving the country’s downstream challenges. However, questions remain over how the government will manage the coexistence of its struggling public refineries and the new private giant.

For ordinary Nigerians, Dangote’s blunt assessment is another reminder of why fuel scarcity and high pump prices have become persistent headaches in a country blessed with abundant crude oil. Many see the success of the private refinery as an opportunity for the government to finally face the facts: unless there is a radical shift in how public assets are managed, the dream of self-sufficiency in fuel supply will remain out of reach.

As Nigeria works towards fully removing petrol subsidies and freeing up funds for other development needs, the role of the Dangote Refinery will likely grow even more crucial. If it can operate efficiently and sustainably, it could well prove that the future of Nigeria’s refining industry lies not in endlessly fixing the old, but in building the new.