Government finally admits what we’ve all known for years. But admission isn’t enough. Nigerians would like to know how government intends to stop the hemorrhage and strengthen the downstream sector.
The Yoruba has this profound adage: “Bí irọ́ bá lọ lógún ọdún, ọjọ́ kan ni òótọ́ yóò ba.” Loosely translated, it means truth has an uncanny ability to unravel a lie, no matter how long the lie has persisted. Ógún ọdún (20 years) is a metaphor for length of time while ọjọ́ kan (1 day), signifies how truth can suddenly expose a lie irrespective of how long it has been spreading.
This adage played out recently with the Nigerian National Petroleum Company Limited (NNPC Ltd), formerly the Nigerian National Petroleum Corporation (NNPC), the hydra headed entity that manages the country’s oil and gas assets.
NNPCL and its moribund refineries
Last week, the current Group Chief Executive Officer of the company, Bayo Ojulari, pulled out all the stops when he punctured a lie that has persisted for so long concerning the state of our refineries. Our governments have repeatedly tried so hard to convince us, for decades, that our refineries are fine even when the realities on ground show otherwise. In 2024, for instance, the current government celebrated the resumption of refining operations at the Warri Refinery. The reality is that the refineries have long been derelict yet the managers kept lying to us about rehabilitation and TAM. The refineries are simply a cesspit of financial wastefulness and drain, and unmitigated graft. The NNPCL, thankfully, took the decision last year to shut them down.
Ojulari was unusually blunt and brave for a public officer. “We were just wasting money,” Ojulari said of the trillions of naira spent over the years on turnaround maintenance of the country’s four government-owned refineries. “The refineries were leaking value, and there was no clear line of sight on how those losses would ever turn into profits.”
Confirming what Nigerians already know
To be sure, Ojulari’s revelation is nothing new. Nigerians have long wondered how a country blessed with so much oil and gas reserves and with four refineries continues to depend on oil importation to run the economy. The country’s four refineries in Port Harcourt (2), Rivers State, Kaduna, and Warri, Delta State, with a combined installed capacity of 445,000 barrels per day, have been largely moribund, producing almost nothing for decades. In spite of their sorry state, successive governments have continued to budget billions of dollars for TAM of the refineries. As recent as 2021, the government of the late Muhammadu Buhari committed about $3 billion on what it called rehabilitation of the refineries. Over the administration’s 8-year reign, an estimated $19 billion was said to have been used to revive the refineries yet there was zero production.
The National Assembly claimed that between 2010 and 2023, N11 trillion was spent on the refineries for TAM or rehabilitation yet the country still imports all of its refined petroleum products before Dangote Refinery came on board. It is clear that the refineries were merely conduits to siphon our commonwealth; they were no more than channels for rent-seeking and grafts. For decades prior to 2023, the NNPC accounts were never audited making it difficult to put a figure to earnings from and expenditure on the country’s oil and gas assets.
Many of government’s assets, past and present, in real estate, entertainment, telecommunications, manufacturing, aviation, power, and other sectors followed similar patterns with NNPC. Poor management, inadequate investments, and deliberate and constant fleecing of government assets left many wondering why should the government run a business.
Instances of government’s poor management of assets abound: Nigeria Airways, an airline that was once the pride of Africa, was run aground, so was the National Electric Power Authority (NEPA), which has since metamorphosed into the Power Holding Company of Nigeria/DISCOs/GENCOs. Then there was NITEL (Nigerian Telecommunications Limited), the Railways, and the National Stadium in Surulere, which continues to rot away.
Unlocking the value of refineries and other national assets
Stakeholders have long called on the government to unlock the value of the refineries and other national assets to optimise their benefits as government seeks to diversify its revenue source and hedge its fiscal balance. Unlocking asset values comes with numerous benefits that are hard to argue against. The financial value includes revenue generation from rent payment and taxes, capital gain, as assets appreciate, and removal of or reduction in subsidies, where required.
The economic value that the refineries can bring to the country if well run and managed include job creation, attraction of further investments, and most importantly industrial growth. A functional refinery will lead to establishment and growth of other industries that directly feeds off a refinery such as petrochemicals and plastics industry, which relies on naphtha and other feedstocks from refining activities to produce construction pipes, synthetic rubber, fibres, solvents and industrial chemicals; construction industry, which gets bitumen (asphalt); healthcare and pharmaceuticals for medical plastics like syringes and tubing, and many other related industries. Other benefits of unlocking value include affordable services, inclusive growth and infrastructure resilience.
Telecoms as poster boy of unlocked value
The telecommunications industry remains the beacon of value optimisation. Before the liberalisation of the telecommunications sector, government was the sole provider of the service through the infamous Nigerian Telecommunications Limited, as it was considered critical to national security. NITEL’s infirmities were legendary: premium grade mismanagement and corruption, poor service quality, inefficiency and bureaucracy leading to endless wait time to get a phone line, and deliberate sabotage.
Then the government liberalised the sector and allowed private sector participation, ushering in GSM operators like MTN, Airtel, Globacom, and 9Mobile. That decision has created so much value for the government in revenue generation through taxes, regular spectrum sales, and licence renewal, job creation, infrastructure development, foreign investments, and more. A sector that contributed less than 1% to the GDP before the liberalisation now accounts for about 15% GDP. The sector, for instance, generated circa ₦4.4 trillion in real GDP in the third quarter of 2025.
Government has also sought to unlock value in its power assets. But, unlike in the telecommunications sector, the liberalisation efforts in power have been halfhearted and, understandably, it has not had the same success as telecommunications.
The era of wastage is over
The broader implication of Ojulari’s revelation is that government may finally be ready to offload the refineries to private sector players. The ongoing audit and valuation of national assets, including the NNPCL, by the ministry of finance also underscore this thinking. The traditional ownership model has been shown to lead to value destruction as assets are poorly managed.
According to the NNPCL boss, the three components of running an efficient and successful refinery – financing, competent engineering, procurement, and construction (EPC) contractors, and world-class operational capacity – have always not been available in the right mix in the nation’s refineries. Government has always provided the financing and engages the EPC contractors but the operational capacity has been the missing ingredient. And this is where the private sector comes in.
Options for unlocking value
There are several options open to the government in optimising these assets. Outright sale of the refineries would be most desirable. The challenge with that though is that years of neglect have put the technical condition of the refineries into question. Interested investors may also be wary of political liabilities as the country’s oil and gas assets have tended to be used as political tools. There is the security risk, the Niger Delta militants, to consider, as well as supply risks. The Dangote Refinery has struggled to get adequate supply of crude from NNPCL. The public private partnerships model, including Build-Operate-Transfer, and joint ventures, has not brought the expected success over the years. Experts suggest asset recycling, where the government sells its mature assets and utilise the proceed to build new infrastructure.
Ojulari’s revelation has effectively untied the country from repeated circles of billions of dollars poured down the refineries’ TAM and rehabilitation drains. “We are ending that era,” the NNPCL boss said. This has also tied the government’s hands as it can no longer justify any spending on the refineries, and the only way forward is to dispose of the assets. However, if government truly desire a robust downstream sector, one not driven by only Dangote Refinery, then it must avoid the temptation to concession or sell the refineries to political cronies, who often do not add value to such assets.
