Nigeria’s decision to shut down its government-owned refineries was a deliberate move to confront long-standing inefficiencies in the downstream oil sector, the Group Chief Executive Officer of NNPC Ltd, Bayo Ojulari, has said.
Addressing participants at the Nigeria International Energy Summit (NIES), Ojulari explained that the country had spent decades sustaining the illusion that the refineries were working, despite clear evidence to the contrary.
According to him, repeated internal assessments showed that the facilities were consuming public funds without generating corresponding value, even as official budgets continued to provide for their rehabilitation.
The NNPC boss noted that Nigeria’s four state-owned refineries, with a combined installed capacity of about 445,000 barrels per day, have hardly operated close to optimal levels for many years.
He said findings from an internal review revealed that refinery activities had been reduced to routine processes rather than viable commercial operations, with consistent cash outflows and little or no returns.
While acknowledging the emotional attachment many Nigerians have to the refineries, Ojulari stressed that sentiment could not override economic reality or substitute for factual assessment.
He recalled that the refineries performed relatively well in the 1980s and 1990s but began to decline in the early 2000s due to shifts away from operational discipline toward contract-driven and financing-focused interventions.
Ojulari added that the weakening of maintenance culture and excessive dependence on turnaround maintenance arrangements gradually eroded NNPC’s in-house technical capacity.
Between 2010 and 2023, he said Nigeria reportedly spent over ₦11 trillion on refinery repairs, yet the country remained heavily dependent on imported fuel, worsening foreign exchange pressure and energy insecurity.
Describing continued spending under such conditions as unsustainable, Ojulari said leadership demanded honesty and the courage to accept when a system had failed.
He explained that shutting down the refineries creates room to reassess options without the burden of ongoing losses and operational distractions.
Ojulari also said the operational Dangote Refinery has helped create an alternative supply base, making it easier for government to abandon what he called years of self-deception.
Looking ahead, he stated that NNPC is pursuing restructuring arrangements with credible partners, insisting that the goal is meaningful reform rather than cosmetic changes.
The refinery shutdown reflects a hard but necessary admission of failure in Nigeria’s downstream oil management. While painful, confronting reality may be the first real step toward sustainable reform, accountability, and long-term energy security if matched with transparent partnerships and firm oversight.
