Why NNPC refineries may never work again – Dangote

The President of Dangote Group, Aliko Dangote, has expressed deep skepticism over the possibility of Nigeria’s state-run refineries — located in Port Harcourt, Warri, and Kaduna — ever becoming operational again.

Speaking on Thursday during a visit by members of the Global CEO Africa delegation from the Lagos Business School to the Dangote Petroleum Refinery in Lekki, Lagos, the billionaire industrialist criticized the Nigerian National Petroleum Company Limited (NNPC) for failing to get the refineries working, despite significant financial investments.

According to Dangote, the government-run refineries have consumed approximately $18 billion with no tangible output. In contrast, he noted that his privately built 650,000-barrel-per-day refinery allocates more than half its capacity to producing Premium Motor Spirit (petrol), unlike the government-owned refineries which only managed about 22 per cent.

Dangote recounted the failed attempt to privatise the facilities during the administration of former President Olusegun Obasanjo, which was reversed under the leadership of the late President Umaru Musa Yar’Adua.

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“The refineries that we bought before, which were owned by Nigeria, were doing about 22 per cent of PMS. We bought the refineries in January 2007. Then we had to return them to the government because there was a change of government,” he said.

“And the managing director at that time convinced Yar’adua that the refineries would work. They said they just gave them to us as a parting gift or so. And as of today, they have spent about $18bn on those refineries, and they are still not working. And I don’t think, and I doubt very much if they will work,” he added.

He likened the ongoing efforts to revive the outdated refineries to attempting to modernize a decades-old automobile with new technology.
“(The turnaround maintenance) is like you trying to modernise a car that was built 40 years ago, when technology and everything have changed. Even if you change the engine, the body will not be able to take the shock of that new technology engine,” Dangote explained.

His comments reinforce earlier criticisms from former President Obasanjo, who last year also questioned the viability of the refineries. Obasanjo had said the NNPC lacked the capacity to operate them and recalled how even international oil giants, such as Shell, declined his request to take over the facilities.

“I ran to him (Yar’Adua), I said, ‘You know this is not right’. He said, ‘Well, NNPC said they can do it.’ I said, ‘NNPC cannot do it,’ I told my successor that ‘the refineries, from what I heard and know, will not work and when you want to sell them, you will not get anybody to buy them at $200m as scrap’. And that is the situation we are in,” Obasanjo said.

“So, why do we do this kind of thing to ourselves? NNPC knew that they could not do it, but they knew they could eat and carry on with the corruption that was going on in NNPC. When people were there to do it, they put pressure. In a civilised society, those people should be in jail,” he added.

Reiterating his stance earlier this year, Obasanjo said: “I was told not too long ago that since that time, more than $2bn have been squandered on the refineries and they still will not work.

“If a company like Shell tells me what they told me, I will believe them. If anybody tells you now that it (the refinery) is working, why are they now with Aliko (Dangote)? And Aliko will make his refinery work; not only make it work, he will make it deliver.”
He concluded with a Yoruba proverb, drawing a comparison between overstated promises and reality: “They say that after he has harvested 100 heaps of yams, he will also have 100 heaps of lies. You know what that means.”

Pressure has mounted in recent months for the Federal Government to privatise the NNPC-managed refineries, following repeated breakdowns despite official claims of their revival. The Port Harcourt facility, which reportedly resumed operations late last year, was shut down again within six months. Similarly, the Warri refinery ceased operations just one month after being declared functional in December by former NNPC Group Chief Executive Officer, Mele Kyari.

The Manufacturers Association of Nigeria and several stakeholders in the energy sector have described the refineries as a financial burden and called for their sale. Some crude oil refiners have even recommended selling them as scrap and redirecting the proceeds to support modular refinery projects.

Despite recurring allocations of public funds, the refineries remain inactive. In 2021 alone, the government approved $1.4 billion for Port Harcourt’s rehabilitation, $897 million for Warri, and $586 million for Kaduna. That same year, N100 billion was spent on refinery maintenance, with a monthly expenditure of N8.33 billion. Additionally, $396.33 million was allocated to turnaround maintenance efforts between 2013 and 2017.

(PUNCH)