Nigeria was just wasting money on Refineries - NNPCL boss

The decision by the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC Ltd), Bayo Ojulari, to halt operations at Nigeria’s state-owned refineries has triggered widespread debate across the country. But speaking at the Nigeria International Energy Summit (NIES), Ojulari made it clear that the move was driven by stark economic realities rather than politics or sentiment.

According to Ojulari, an internal commercial review of the refineries revealed that continued operations under the existing structure were destroying value and draining scarce public resources.

“We were just wasting money,” Ojulari said bluntly. “The refineries were leaking value, and there was no clear line of sight on how those losses would ever turn into profits.”

Nigeria’s four government-owned refineries — two in Port Harcourt, one in Warri, and one in Kaduna — have a combined installed capacity of 445,000 barrels per day. Yet for decades, they have operated far below optimal levels, often producing little or no refined products while consuming billions of naira annually in operating and maintenance costs.

Ojulari said the decision to halt operations was taken after it became clear that running the refineries simply to show activity made no commercial sense.

“You cannot sleep when you have been trained for decades to look at profitability and commerciality,” he said. “When you are running an asset that turns crude oil into lower-value products while contractor costs continue to rise, that is not business. That is value destruction.”

Between 2010 and 2023, the federal government reportedly spent over ₦11 trillion on refinery rehabilitation and turnaround maintenance. Despite these massive investments, Nigeria remained heavily dependent on imported petrol, diesel, and aviation fuel, placing immense pressure on foreign exchange reserves and exposing the economy to global supply shocks.

In the 1980s and much of the 1990s, NNPC’s refineries operated efficiently, but performance declined in the 2000s as institutional focus shifted away from operational excellence toward EPC contracting, O&M structures, and financing-driven interventions. This transition weakened preventive maintenance culture, increased reliance on turnaround maintenance cycles that proved more commercially attractive to external parties, and contributed to the gradual erosion of in-house operational capacity within NNPC. In this context, the 2025 decision to shut down the refineries represents a pragmatic and necessary step toward halting value loss and enabling a more sustainable long-term reset of Nigeria’s refining framework.

Ojulari acknowledged that there was significant public pressure to keep the refineries running, even at a loss.