By peterside Rejoice
For decades, Nigeria’s government-owned refineries stood as symbols of national industrial ambition. However, years of poor performance, inefficiency and mounting financial losses eventually forced the Nigerian National Petroleum Company Limited, NNPC, to take the difficult decision to shut them down. The Group Chief Executive Officer of NNPC Limited, Bayo Ojulari, has explained that the move was unavoidable and necessary to stop further waste of public resources.
Ojulari spoke at the Nigeria International Energy Summit, NIES, where he gave a detailed account of why the refineries could no longer be sustained. According to him, an honest assessment of the facilities showed that they had no realistic path to profitability.
He said the refineries were consuming huge sums of money without delivering value to the nation, describing their continued operation as economically unjustifiable. Ojulari stated that the new leadership of NNPC was determined to confront hard truths rather than sustain a failing system.
Nigeria has four state-owned refineries located in Port Harcourt, Warri and Kaduna, with a combined installed capacity of about 445,000 barrels of crude oil per day. In reality, the facilities have for many years operated far below capacity and, in most cases, remained completely idle. Persistent problems such as chronic underinvestment in maintenance, obsolete equipment, weak management structures and systemic corruption rendered the refineries largely non-functional.
Despite their poor performance, successive governments continued to approve funds for turnaround maintenance and rehabilitation. Ojulari disclosed that over a 13-year period, an estimated ₦11 trillion was spent on repair efforts with little or no improvement in output. He said the repeated interventions failed to address the fundamental structural and operational weaknesses of the refineries.
According to him, there came a point when NNPC had to decide whether it was genuinely fixing the problem or merely sustaining a system designed to consume public funds without accountability. He noted that continuing along the same path would only deepen losses and delay meaningful reform.
Ojulari explained that the refineries performed relatively well in the 1980s and much of the 1990s, when strong emphasis was placed on operational discipline and in-house technical competence. However, their decline accelerated in the 2000s as attention shifted away from core operations to contract-driven arrangements. These included EPC contracting, outsourced operations and maintenance models, and financing-led interventions.
He said this shift weakened the culture of preventive maintenance, increased dependence on turnaround maintenance cycles that were commercially attractive to external contractors, and gradually eroded NNPC’s internal capacity to efficiently operate complex refinery assets.
In this context, the 2025 decision to shut down the refineries was taken to halt further value destruction and create room for a comprehensive reset of Nigeria’s refining framework. Ojulari said the shutdown allows NNPC to stop incurring daily losses while working towards a new operating model based on accountability, competence and sustainability.
He stressed that operating an asset simply because it exists cannot be justified if it consistently destroys value. According to him, responsible leadership requires the courage to stop failing operations, even when such decisions are politically sensitive.
Ojulari acknowledged that the shutdown attracted strong public and political reactions. He said the pressure on the NNPC leadership was intense, with many Nigerians expressing anger and frustration over the fate of the refineries. However, he maintained that leadership is about making the right decisions for the long-term interest of the country, not yielding to popular sentiment.
He also pointed to the Dangote Refinery as a major development that has changed Nigeria’s refining landscape. Ojulari said the emergence of a large, privately owned refinery has provided Nigeria with much-needed breathing space in domestic fuel supply. He described the Dangote Refinery as a positive development for the country, noting that its Nigerian ownership is significant.
With increased private sector participation in refining, Ojulari argued that Nigeria no longer needs to cling to inefficient public refineries at all costs. He said the focus should now be on creating a sustainable and commercially viable refining ecosystem rather than preserving failing state assets for sentimental reasons.
More importantly, Ojulari revealed that NNPC is pursuing a strategic shift away from short-term, contract-based maintenance arrangements towards long-term operational and equity partnerships. He said successful refining operations require world-class technical operators with aligned incentives, a reality that was ignored for decades.
According to him, NNPC is now open to partnerships that ensure shared responsibility, accountability and performance. He stressed that this approach does not amount to selling off national assets but represents a more mature and realistic business strategy.
Ojulari concluded that the refinery shutdown marks a clear break from a past defined by waste, denial and institutional complacency. He said the goal of the new NNPC leadership is to redesign the system so that it delivers real value to Nigerians rather than serving as a drain on national resources.
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