The Nigerian National Petroleum Company (NNPC) Limited has revealed it is reviewing the possibility of selling its three state-owned refineries in Port Harcourt, Warri, and Kaduna, despite investing an estimated $18 billion in their rehabilitation.
Group Chief Executive Officer of NNPC, Bayo Ojulari, disclosed this during an interview with Bloomberg on the sidelines of the 9th OPEC International Seminar in Vienna, Austria.
Ojulari admitted that the massive investments and technological inputs deployed over the years have not yielded the expected results, describing the rehabilitation process as more complex than initially anticipated.
“We’ve made significant investments in these refineries over several years and introduced advanced technologies.
“Unfortunately, some of these technologies have not performed as expected. When dealing with very old refineries that have been idle for extended periods, the challenges become more complicated,” he said.
According to him, the company is currently reviewing its entire refinery strategy, and the outcome of that review may include putting the facilities up for sale.
“We’re reassessing all our refinery strategies now, and we hope to conclude the review before the end of the year.
“That review could lead us to take a different approach. To be frank, sale is not off the table. All options are being considered,” Ojulari stated.
On oil production costs, the NNPC boss revealed that Nigeria currently spends between $25 and $30 per barrel due to high operating costs—largely driven by security-related investments to protect crude oil pipelines.
“Our operating costs are quite high—above $20 per barrel—mainly because of investments made to secure our pipelines.
“Right now, we have 100 percent availability on our pipeline network, but that came at a cost. We hope that with time and stability, these costs will come down,” he added.
Meanwhile, Dangote Group President, Aliko Dangote, has cast doubt on the viability of the government-owned refineries, suggesting they may never function properly again despite the billions spent.
Speaking on Thursday while hosting members of Global CEO Africa at his Lagos-based Dangote Refinery, Dangote recalled the failed 2007 privatisation of the refineries, which were returned to government under late President Umaru Musa Yar’Adua.
“When we acquired the refineries in January 2007, they were doing just about 22 percent of Premium Motor Spirit (PMS) output. But when the administration changed, we were asked to return them.
“The then Managing Director of NNPC convinced President Yar’Adua that the refineries could be revived. Since then, about $18 billion has been spent on turnaround maintenance, yet they are still not working,” he said.
Dangote compared the effort to revamp the aging facilities to trying to modernise a 40-year-old vehicle.
“Even if you change the engine, the body of the car cannot handle the new technology. The same goes for these refineries. I doubt they’ll ever work again,” he said.
