TIMELINE: Nigerian govt’s failed moves, unfulfilled promises to revive moribund refineries

The Nigerian government’s promises to revive the country’s moribund refineries have been a long-standing issue.

Nigeria has four major refineries, two in Port Harcourt, Rivers State, which combine to form the Port Harcourt Refining Company (PHRC) with a combined installed capacity of 210,000 barrels per day (bpd); the Kaduna Refining and Petrochemical Company Limited (KRPC) with an installed capacity of 110,000 bpd; and the Warri Refining and Petrochemical Company Limited (WRPC) with an installed capacity of 125,000 bpd.

All the refineries have a combined installed capacity of 445,000 barrels per day.

For decades, the refineries have performed below optimal levels despite the huge resources earmarked for their rehabilitation. In May 2023, the House of Representatives ad-hoc committee on the state of refineries in the country said the federal government spent over N11 trillion on the rehabilitation of the refineries from 2010 to 2023.

The breakdown of the local refineries pushed Nigeria to depend solely on importation of petroleum products for domestic use for many years, constituting a major drain on the nation’s foreign reserves.

For decades, successive administrations have promised and made moves aimed at reviving the nation’s refineries to reduce dependency on petrol importation but have failed.

In this report, PREMIUM TIMES presents a timeline of the government’s failed promises to revive the refineries since the administration of former President Olusegun Obasanjo.

May 2007: Obasanjo sold PHRC and KRPC to Aliko Dangote and partners

On 17 May 2007, less than two weeks before the end of President Olusegun Obasanjo’s administration the PHRC and KRPC were sold to Aliko Dangote and partners, under the aegis of Bluestar consortium at the sum of $750 million.

“We are handing over Port Harcourt and Kaduna refineries to Dangote today,” the Bureau for Public Enterprises (BPE) said on 28 May 2007.

July 2007: Yar’Adua reverses sale

In July 2007, barely two months in office, the late President Umaru Yar’Adua held meetings with the BPE to query the sale of the refineries following widespread criticism of the deal. According to reports, Mr Yar’Adua, after considering the facts presented to him, immediately revoked the sale of the refineries, thus halting private intervention in the running of the refineries.

Mr Yar’Adua’s decision to revoke the deal at the time, according to reports, was based on concerns about transparency, national interest and fairness. But Mr Obasanjo in an interview with Channels Television’s ‘Book Club’ programme said his immediate successor reversed the sale due to pressure, noting that Mr Yar’Adua not only canceled the sale but also refunded the $750 million paid by Dangote and his investors. Mr Obasanjo expressed his disappointment, stating that the pressure from certain individuals took precedence over the nation’s interest.

May 2011: Jonathan initiated a 24-month comprehensive rehabilitation

In May 2011, as part of his four-year term agenda towards growing the economy through the oil sector, President Goodluck Jonathan directed the old Nigerian National Petroleum Corporation (NNPC) (now Nigerian National Petroleum Corporation Limited) to carry out a comprehensive rehabilitation of the refineries within 24 months.

The project was scheduled to commence in August 2011 and expected to be completed by the first quarter of 2012.

December 2013: Jonathan approved privatisation

In a surprising turn of events, Mr Jonathan approved the privatisation of the four refineries in December 2013. A steering committee, headed by then Minister of Petroleum, Diezani Alison-Madueke, was formed to oversee the process and make recommendations to the National Council on Privatisation.

The announcement sparked fierce opposition from labour unions, particularly the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the National Union of Petroleum and Natural Gas Workers (NUPENG). The unions threatened to embark on a nationwide strike if the refineries were privatised.

January 2014: Jonathan’s administration reversed privatisation plan

In January 2014, in response to the union’s threats, Special Adviser to the President on Media and Publicity at the time, Reuben Abati, said the government had no plans to privatise the refineries.

This abrupt reversal marked the end of Jonathan’s administration’s plan to sell the refineries.

March 2015: Buhari’s push for fixing of refineries as presidential candidate, and as president

In March 2015, then presidential candidate of the All Progressives Congress, President Muhammadu Buhari lambasted past governments and then sitting President Jonathan for failing to fix refineries and leaving Nigerians at the mercy of fuel imports.

Mr Buhari, who later won the presidential candidate, was responding to a widespread scarcity of petrol that went on for months.

He said past governments, and Mr Jonathan’s, left Nigeria at the mercy of fuel imports by failing to fix the refineries.

On assuming power in May 2015, Mr Buhari pledged to revive Nigeria’s minimally performing refineries to optimum capacity and boost foreign reserves by ending the importation of refined fuel.

His administration would also be characterised by severe petrol scarcity almost throughout his eight years in office.

August 2015: Kachikwu’s 90-day ultimatum

Upon assumption of office as the Group Managing Director of NNPC in August 2015, Ibe Kachikwu immediately issued a 90-day ultimatum to the WRPC to commence operation at its full capacity of 125,000 barrels per day. Similar directives were given to other refineries in a bid to make the refineries perform.

September 2015: Refineries’ poor performance

In September 2015, the NNPC in its report said Nigeria’s refineries worked at a combined capacity utilisation of a measly 1.96 per cent.

December 2016: NNPC’s promise of full capacity by 2017

In December 2016, the NNPC promised that the three refineries will work at “full blast” by 2017. Ndu Ughamadu, the group general manager, group public affairs division, at the time, said in a statement that NNPC would embark on a comprehensive rehabilitation of the refineries to achieve optimal capacity utilisation.

September 2017: New rehabilitation timeline

But in September 2017, nine months after the announcement, the then NNPC’s Group Managing Director, Maikanti Baru, again announced the government’s plan to shut down the refineries for overhaul.

November 2018: Deadline shifted to 2020

In November 2018, the Buhari administration fixed December 2019 as the deadline for three refineries to attain full production capacity to end petroleum importation in the country. Later in the month, the deadline was shifted to 2020.

Although the 2020 deadline was not realised, the government spent N10.23 billion in June 2020 on the three refineries that processed zero crude.

March 2019: PHRC shut down for first phase repair

In March 2019, PHRC shut down or the first phase of repair works after the government secured the service of Italy’s Maire Tecnimont to handle the review of the refinery complex, with oil major Eni appointed technical adviser.

The first phase was initially scheduled to be rounded up in 18 months (December 2022) from the point of the agreement, taking the refinery to 90 per cent production capacity with the second and third phases completed within 24 months and 44 months, respectively. But the timelines failed.

March 2021: Approval of rehabilitation contract for PHRC

In March 2021, NNPC Ltd said repairs had started at PHRC after the Federal Executive Council (FEC) approved $1.5 billion for the project.

August 2021: Approval of rehabilitation contract for Warri and Kaduna refineries

In August 2021, the FEC approved the award of the contract for the rehabilitation of the Warri and Kaduna refineries at the combined total sum of $ 1.5 billion, assuring that rehabilitation works on both refineries would also be carried out on or before May 2023.

September 2022: Minister Sylva announced PHRC operations revamp timeline

In September 2022, the then Minister of State for Petroleum Resources, Timipre Sylva, said that the country’s biggest crude refinery in Port Harcourt would restart operation in December after it would have completed a revamp that was said to have started a year earlier. But PREMIUM TIMES analysis in October the same year showed that the timelines were not met.

January 2023: Minister Sylva revised timeline for PHRC operations

Again in January 2023, Mr Sylva assured that part of the refinery would be completed by the first quarter of the year, but the government again failed to meet its target.

February 2023: NNPC sign agreement for WRPC and KRPC rehabilitation

In February 2023, the NNPC signed an agreement with Daewoo Engineering & Construction Nigeria Limited for the rehabilitation of the KRPC.

August 2023: Tinubu’s administration set new dates for PHRC, KRPC, WRPC

In August 2023, the President Bola Tinubu administration assured that the PHRC would become functional by December after numerous failed attempts, noting that Warri would come on stream by the end of the first quarter of 2024, and Kaduna would also come on board towards the end of 2024.

October 2023: Lokpobiri reassured KRPC will be back on stream by 2024.

In October 2023, the Nigerian government reassured that with the ongoing quick-fix project, the KRPC would be back on stream by the end of 2024. At the time, Minister of State for Petroleum Resources, Heineken Lokpobiri, said he was confident that the refinery would be re-streamed by the end of 2024, considering the “significant level of progress” he said he saw during a tour of the refinery to assess the progress of the work on the ongoing quick-fix project.

December 2023: Mechanical completion announcement

On 21 December, Mr Lokpobiri announced the mechanical completion and the flare start-off of the PHRC. The development implied that the fixing of the refinery’s equipment and systems had been completed. At the time, he explained that production of petroleum products at the refinery would commence after Christmas break.

March 2024: Kyari announced PHRC would begin operation in April

In March 2024, the Group Chief Executive Officer of NNPC Ltd, Mele Kyari, said the PHRC had received crude oil and would begin operations in April. This, however, did not happen.

July 2024: NNPC revised operation commencement date for PHRC and KRPC

Again on 15 July 2024, the NNPC Ltd announced that the PHRC would commence operations in early August while noting that it was impossible to have the Kaduna refinery commence operation before December.

However, despite various announcements by the government, the refineries have yet to start crude oil refining.

Over N11 trillion spent on rehabilitation in 13 years

In May 2023, the house of representatives ad-hoc committee on the state of refineries in the country said the federal government spent over N11 trillion on the rehabilitation of the refineries from 2010 to 2023.

Yet, this investment has not yielded significant returns.

On 24 October 2023, the Senate constituted an ad hoc committee to investigate all contracts awarded for the rehabilitation of the four moribund refineries in the country.

Again on 7 August 2024, the Senate ad-hoc committee investigating the alleged economic sabotage in Nigeria’s petroleum industry expressed concern over the failure of government-owned refineries to function despite committing billions of dollars to their rehabilitation yearly by successive governments.

Criticism of government approach

Speaking with PREMIUM TIMES, Dan Kunle, an energy expert, expressed strong reservations about the Nigerian government’s handling of the refinery rehabilitation contract. He said the government has been “political” about it, adding that it also lacks professionalism.

Mr Kunle explained that the government’s failure to engage the original refinery builders has been a costly mistake.

“The refinery’s rehabilitation was not professionally done because the government did not search for the original refinery builders in the first place and that’s the beginning of the error. So, the government’s decision to spend public money on rehabilitation without involving the original builders is fundamentally flawed,” Mr Kunle said.

He suggested that privatisation, as attempted by former President Obasanjo, would have been a more effective solution. Instead, the government has awarded contracts to companies from different countries, such as Italy and South Korea, which do not necessarily have the expertise or understanding of the refineries’ original design.

He warned that the refineries may never function optimally due to the ineffective rehabilitation process. At best, he said, the Port Harcourt refinery may become a blending plant, rather than a full-fledged refinery. “This would undermine Nigeria’s efforts to become self-sufficient in petrol production.”

To address these challenges, Mr Kunle called for a more transparent and expert-driven approach in the refinery’s rehabilitation.