.Little option exists as NNPCL lacks internal operating capacity
- TEP plugs into China’s vast capital market, creates new jobs
- Partnership to unlock new FDIs, build refining hubs – Avuru
SOPURUCHI ONWUKA (Editor)
A vast spectrum of stakeholders across the Nigerian economy has robustly endorsed the Memorandum of Understanding (MoU) signed between the Nigerian National Petroleum Company (NNPC) Limited and two Chinese firms on the rehabilitation, modernization and reactivation of the country’s moribund state-owned refineries.
Industry leaders, petroleum experts, economists, labour unions and energy consultants who spoke to Daily Champion described the emerging Technical Equity Partnership (TEP) model as a major strategic shift capable of restoring domestic refining capacity, strengthening energy security, reducing dependence on imported petroleum products and stimulating broad-based industrial growth.
The endorsements followed the recent announcement by the Group Chief Executive Officer of NNPC Limited, Engr Bayo Ojulari, that the national oil company had entered into an MoU with Sanjiang Chemical Company Limited and Xingcheng (Fuzhou) Industrial Park Operation and Management Company Limited for the rehabilitation and commercial operation of Nigeria’s ailing refineries.
Supporters of the arrangement argued that after decades of failed turnaround maintenance programs, endless public spending and recurring refinery shutdowns, the new partnership model represents perhaps the boldest and most commercially realistic attempt yet to revive the country’s downstream petroleum sector.
Tinubu’s reform agenda and the push for refining capacity For decades, Nigeria’s state-owned refineries have stood as symbols of poor maintenance culture, policy inconsistency, and the contradictions to huge national investments in domestic energy security and affordable fuel.
Following decades of poor asset management, the nation’s refineries located in Port Harcourt, Warri, and Kaduna steadily deteriorated, went moribund and suffered obsolescence amidst allegations of corruption, weak operational governance, and cycles of huge-budget maintenance exercises.
Despite billions of dollars reportedly spent in recent years by successive governments in announced rehabilitation programs, the plants remained largely idle while the economy continues to suffer rising energy costs, supply instability and inflationary pressure.
Thus, the prevailing refinery rehabilitation initiative is unfolding within the broader energy sector reforms introduced by President Bola Tinubu following his assumption of office.
The president had entered office with a clear commitment to dismantling state sponsored fuel supply dominance, liberalizing domestic fuel market and repositioning the petroleum industry toward commercial sustainability.
After his first year in office, Tinubu reconstituted the board of NNPC Limited in what policy promoters define as a more strategic and performance-driven approach to addressing the long-standing structural and operational problems confronting the national oil company.
The reforms were particularly targeted at NNPC’s struggling downstream operations, which remain central to Nigeria’s past fuel supply instability, import dependence and the current scramble for supply niches in the domestic fuel market.
Yet, the national oil company, which lost its supply dominance to the private Dangote Refinery after liberalization of the downstream fuel market, is yet to find significant space in the evolving market supply competition. And the NNPC’s loss of strategic position in the domestic market has left Nigerians unprotected from price escalation as private monopoly rules the market.
In line with Section 59(2) of the Petroleum Industry Act (PIA), 2021, the president empaneled a new board of private technocrats for NNPC Limited and charged them with improving operational efficiency, restoring investor confidence, increasing local content participation and rebuilding Nigeria’s refining capacity.
The president also appointed retired Shell’s chief executive, Bashir Bayo Ojulari, as Group Chief Executive Officer with strong mandate to deploy his private sector experience in addressing longstanding inefficiencies within the national oil company.
Amid efforts to remove barriers confronting new refinery investments and reduce pressure on foreign exchange caused by fuel importation, President Tinubu also directed the new board and management of NNPC Limited to raise public-sector refining output to 500,000 barrels per day by 2030.
The directive immediately placed Nigeria’s existing refineries at the center of national energy policy. The Port Harcourt, Warri and Kaduna refineries currently possess a combined installed refining capacity of about 445,000 barrels of crude oil per day, although the facilities have remained largely moribund for years.
Policy drivers believe that reviving and expanding the facilities could reset Nigeria’s downstream petroleum industry toward a commercially viable and globally competitive model capable of unlocking greater economic value from the nation’s hydrocarbon resources.
Industry and economic pundits agree that successful refinery revival would further reduce imported fuel volumes, conserve foreign exchange, deepen industrialization, improve domestic energy security, and allow Nigeria to capture greater value from its crude oil resources.
Ojulari’s candid admission: NNPC lost refining capacity years ago!
One of the strongest moments in the ongoing refinery debate came when NNPC GCEO, Engr Bayo Ojulari, openly admitted that the company had effectively lost the internal technical and operational capacity required to run commercially viable refineries.
Speaking at an industry conference in Abuja, Ojulari stated that internal assessments conducted by the new management showed that the three refining companies under the NNPC Group had become major centers of commercial losses and financial inefficiency.
According to him, years of failed rehabilitation efforts have drained public resources without producing sustainable refining output.
Ojulari explained that the new board and management carefully reviewed several options, including outright sales of the refineries, before eventually settling for an incorporated joint venture model that would allow NNPC to retain strategic interests while transferring operational responsibilities to technically competent private partners.
His unusual candor in presenting the clear picture of the refineries to the public also comes with another uncomfortable truth that decades of failed turnaround maintenance projects exposed deep weaknesses in operational governance, technical management, maintenance discipline, funding structures, and accountability systems.
While pointing out that larger corporate culture issues remain broad, Ojulari disclosed that the company has concluded that the refineries still possessed substantial underlying value. He also reiterated that NNPC no longer had the operational depth required to run the facilities profitably.
The NNPC boss also noted that the emergence of private refineries following market deregulation had helped shield the economy from severe supply shocks, stressing that collaboration with efficient private-sector operators had become unavoidable if Nigeria hoped to restore sustainable refining operations.
From fireside chat sessions at conferences through public statements and presentations to legislators, NNPC Limited stated that it has continued to assuage stakeholders’ interests in the fate of the refineries in view of altering supply dynamics in the liberalized domestic energy market.
And for many stakeholders, Ojulari’s public acknowledgment of NNPC’s operational limitations represented a major departure from decades of official claims that refinery rehabilitation programs were succeeding despite little evidence of sustained refining output.
Critics raise concerns over transparency and technical capacity
Despite the elaborate exhalations regularly pumped out from NNPC Limited, the MoU has also generated strong criticism from several prominent voices within Nigeria’s political and business environment.
Former President Olusegun Obasanjo strongly criticized NNPC’s refinery management history, insisting that the facilities would never function efficiently under government control.
Obasanjo argued that despite billions of dollars reportedly spent on turnaround maintenance since 2007, the Port Harcourt, Warri and Kaduna refineries remain largely moribund.
He recalled how his administration had previously sold the refineries to a consortium led by Aliko Dangote in a $750 million transaction aimed at privatizing and reviving the plants before the deal was later reversed.
According to Obasanjo, the only sustainable path forward would be an incorporated joint venture structure similar to the Nigeria Liquefied Natural Gas (NLNG) model, where government retains significant ownership while technically competent private operators manage the assets.
The Nigeria Employers’ Consultative Association (NECA) also faulted the MoU, describing it as another opaque arrangement amid unresolved questions over previous refinery rehabilitation spending.
NECA Director-General, Adewale Oyerinde, argued that it would be unpatriotic to support another refinery rehabilitation initiative without full disclosure of the billions of dollars reportedly spent on failed turnaround maintenance projects over the years.
The association maintained that Nigeria could not afford another cycle of wasteful expenditure after allegedly spending nearly $25 billion on refinery rehabilitation without achieving sustainable operations.
NECA specifically questioned the status of the $1.5 billion rehabilitation project approved for the Port Harcourt refinery in 2021, noting that despite repeated assurances, the refinery failed to deliver meaningful refining output.
The association demanded greater transparency regarding the details of the proposed technical equity partnership, including safeguards against delays, cost overruns and operational failures that characterized previous rehabilitation programs.
Former Vice President Atiku Abubakar also weighed in strongly against the arrangement, calling for immediate suspension and public scrutiny of the MoU involving the Chinese firms.
Atiku described the partnership as “another dangerous gamble” with Nigeria’s economic future and accused the incumbent administration of the government of pursuing opaque arrangements lacking technical credibility and accountability.
He questioned the operational pedigree of the Chinese firms, arguing that publicly available records did not show that either Sanjiang Chemical or Xingcheng possessed extensive experience in operating large-scale crude oil refineries.
According to Atiku, Sanjiang’s expertise appeared concentrated in petrochemicals and light hydrocarbon processing, while Xingcheng seemed more focused on industrial park and infrastructure management.
The former Vice President also expressed concerns about the financial position of Sanjiang Chemical, citing reports of declining revenues and increasing debt exposure.
Daily Champion reports that former President Obasanjo privatized the refineries at a period when his vice, Atiku Abubakar, headed the National Council on Privatization (NCP) and effectively supervised the sales transaction to a consortium of indigenous companies led by Alhaji Aliko Dangote.
It is believed that both Obasanjo and Atiku are still indignant to the reversal of the privatization deal by succeeding late President Umaru Musa Yar’Adua. Pundits still describe the deal reversal by late Yar’Adua as politically incorrect and betrayal of party loyalty.
NNPC defends technical equity partnership model
In response to the criticisms, executives of NNPC Limited strongly defended the new Technical Equity Partnership strategy, insisting that the model represented the most feasible and commercially sustainable route to refinery revival after decades of failed internal rehabilitation efforts.
Documents made available to Daily Champion indicate that under the arrangement, the Chinese firms would assume technical and operational responsibilities aimed at improving efficiency, reliability and long-term refining output.
NNPC explained that the model differs fundamentally from previous turnaround maintenance programs because external partners would not only complete rehabilitation work but also participate directly in operations and maintenance under a performance-driven framework.
The Port Harcourt Refining Company (PHRC) and Warri Refinery and Petrochemical Company (WRPC), with combined installed refining capacity of about 335,000 barrels per day, are expected to undergo upgrades and expansion to meet modern operational and environmental standards.
NNPC spokesperson, Mr Andy Odeh, disclosed that the MoU emerged after more than six months of detailed technical and commercial negotiations.
According to him, the arrangement seeks to ensure sustainable refining output, improve operational efficiency and position the facilities to produce cleaner and commercially viable petroleum products in line with global standards.
Beyond fuel production, NNPC said the partnership would support petrochemical expansion and broader downstream industrialization linked to Nigeria’s expanding gas infrastructure projects.
The company also revealed plans to develop integrated gas-powered industrial hubs around the refinery locations to stimulate manufacturing activities, create additional value chains and strengthen the long-term viability of Nigeria’s refining sector.
Ojulari maintained that outright sales of the refineries would amount to severe value erosion after years of investments in rehabilitation efforts.
He reiterated NNPC’s commitment to repositioning itself as a commercially driven and professionally managed energy company focused on transparency, performance and long-term value creation.
Industry experts see economic and industrial benefits.
Several industry stakeholders who spoke to Daily Champion argued that successful rehabilitation of the refineries could significantly improve Nigeria’s economic outlook.
Group Chief Executive Officer of HSI Energies, Engr Chike Nwosu, stated that refinery rehabilitation could generate substantial employment opportunities and stimulate domestic industrial development around the activity hubs.
Engr Nwosu is a former Shell executive who later became the managing director of Waltersmith’s Ibigwe refinery in Imo State. He is a prominent member of the Nigerian Council of the Society of Petroleum Engineers (SPE).
According to him, local refining creates far more jobs than upstream crude production because refining operations generate wider industrial linkages, logistics clusters and manufacturing ecosystems.
Nwosu argued that every additional 200,000 barrels per day refining capacity could significantly boost Nigeria’s GDP while also reducing pressure on foreign exchange caused by fuel importation.
He further explained that increased domestic refining could expand fiscal revenues through taxes and value-added economic activities while eventually increasing product supply and supporting competitive fuel pricing.
He stated that HSI Energies is focused on scalable refinery proliferation due to the abundant economic benefits that align with the ecosystem. Despite churning out vast numbers of different fuel and non-fuel products, he explained, the refineries driven by his consortium of players would mop up vast number of skilled and semi-skilled youth from the job market, reducing crime and delinquency from society.
On concerns about the technical pedigree of the investors and compatibility of refinery technologies, Engr Nwosu dismissed them as minor issues, saying that what matters is the technical capacity to play in the full process chain.
He made it clear that refinery builders and original equipment manufacturers are hardly operators of the equipment they produce.
Chairman of AA Holdings and founding Managing Director of Seplat Energy Plc, Mr Austin Avuru, also defended the rehabilitation strategy, insisting that many of the criticisms currently being raised are precisely the issues the new management claims to be addressing.
Mr Avuru is also fonding Manging Director of Platform Petroleum, and former Chairman of Nigerian Association of Petroleum Explorationists (NAPE) who also sits on the board of Pillar Oil.
He praised Ojulari for openly acknowledging the operational realities confronting the refineries and argued that selling the assets would not eliminate the need for rehabilitation since any prospective buyer would still need to restore the facilities.
He added that the partnership could unlock new foreign direct investment opportunities in Nigeria’s refining sector and potentially transform the country into a major regional refining hub.
Labour unions back deal but demand accountability.
The newly elected President of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), Comrade Otumba Salmon Oladiti, also endorsed the partnership while urging strict transparency and accountability during implementation.
Oladiti described the initiative as an important opportunity to address Nigeria’s long-standing dependence on imported petroleum products despite being one of Africa’s largest crude oil producers.
He noted that refinery rehabilitation could help restore public confidence in Nigeria’s refining capacity, create employment opportunities, strengthen energy security and reduce the economic hardship associated with unstable fuel supply and rising import costs.
However, he warned that Nigerians were already exhausted by repeated refinery rehabilitation promises that consumed huge public funds without delivering lasting results.
According to him, the revival of the Port Harcourt and Warri refineries must produce tangible economic benefits rather than become another political announcement.
Economists, energy lawyers and analysts endorse strategy
Energy economists and policy analysts also expressed support for the emerging partnership structure.
President of the Institute of Professional Economists and Policy Management, Prof. Ken Ife, described the arrangement as commercially promising and potentially transformative.
He argued that the Chinese firms bring complementary technical, operational and financing capabilities capable of strengthening refinery efficiency and downstream industrial productivity.
Ife particularly praised the integrated industrial park and petrochemical elements embedded within the proposed partnership structure, noting that they could support broader industrial ecosystems around the refinery locations.
According to him, the arrangement could eventually mirror the governance structure of NLNG, where government retains substantial equity while technically competent private operators manage the business efficiently.
He also pointed to opportunities for long-term financing support from Chinese EXIM institutions and guaranteed product off-take arrangements that could improve project sustainability.
Partner at Zera Advisory and Consulting, Dr Joseph Nwakwue, stated that Nigeria must support every credible effort aimed at restoring refining operations, adding that local refining remains critical for employment generation, supply stability and downstream competition.
Similarly, Partner and Chair of Energy and Natural Resources Practice Group at Bloomfield Law Practice, Dr Ayodele Oni, noted that technical equity partnerships could help revive underperforming national assets provided transparency, governance and enforceable operational oversight remain firmly in place.
Why supporters believe TEP makes sense
Supporters of the refinery partnership insist that fears about Nigeria “losing out” under the proposed Technical Equity Partnership are largely misplaced.
According to them, unlike previous refinery rehabilitation efforts funded directly through public expenditure, the new framework is structured around shared risk, private-sector discipline, technical collaboration and commercial sustainability.
They argue that the greatest risk facing Nigeria is not entering partnerships but leaving strategic national assets idle while the country relies on commercial operators for supply of refined petroleum products at enormous economic cost.
Proponents also maintain that the MoU itself is not yet a binding commercial agreement but rather a framework for negotiations, due diligence and evaluation of technical, financial and operational terms.
They insist that major global energy partnerships are ultimately determined not by nationality but by financing strength, operational capability, technology, execution capacity and enforceable performance obligations.
Industry pundits argue that ageing refineries across the world have been successfully modernized and returned to profitable operation when supported by sound governance structures and competent operators.
According to them, Nigeria’s refinery failures stemmed less from technical impossibility and more from governance failures, delayed maintenance culture, weak accountability, funding gaps and operational inefficiency.
The new strategy, they argue, seeks to address precisely those weaknesses through operational restructuring, commercial discipline and performance-based partnerships.
A defining test for Nigeria’s energy future
Daily Champion reports that the intensifying debate about the new strategies to public refinery revamp amplifies the fact that Nigeria’s refining crisis has become too costly to ignore.
For decades, Africa’s largest crude oil producer has paradoxically burnt billions of dollars on fuel importation while local refineries were left to rot away. And every past attempt at reviving the refineries ended in controversies around looted funds. Thus, the failed turnaround maintenance programs proved very costly but delivered little measurable value.
The new partnership between NNPC Limited and the Chinese firms has therefore emerged as more than just another refinery deal. For supporters, it represents an opportunity to finally break away from a cycle of inefficiency, waste and operational failure that has crippled the downstream sector for over four decades.
While critics continue to demand stronger transparency, accountability and technical scrutiny, proponents insist that the Technical Equity Partnership offers Nigeria its best chance yet to restore domestic refining capacity under a commercially sustainable model.
For many stakeholders backing the initiative, the argument is that Nigeria’s domestic fuel market cannot continue spending billions of dollars patronizing private refiners while strategic national refining assets remain idle.
Therefore, the success of the TEP, they believe, could mark the beginning of a new era in which the country finally transforms its vast petroleum resources into broader industrial growth, energy security, employment generation and long-term economic resilience.
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