Why Nigeria’s Government Refineries Keep Failing, Bayo Ojulari
The persistent failure of Nigeria’s state-owned oil processing facilities has remained a central point of national debate, particularly as the country continues to struggle with high fuel prices and import dependency. Providing a technical deep dive into this crisis, industry expert and former Managing Director of the Shell Nigeria Gas Limited, Mohammed Ojulari, has shed light on why government refineries are not working despite the humongous financial resources committed to their rehabilitation over the decades. According to Ojulari, the problem is not merely a lack of funding but a fundamental failure in the operational and maintenance models adopted by the government.
Speaking on the structural bottlenecks within the Nigerian National Petroleum Company Limited (NNPC), Ojulari emphasized that the current state of the Port Harcourt, Warri, and Kaduna refineries is a direct result of decades of “on-and-off” maintenance rather than a consistent, world-class operational culture.
A primary reason why government refineries are not working is the neglect of Turnaround Maintenance (TAM). In the global oil and gas industry, refineries are expected to undergo comprehensive maintenance every two to three years to ensure optimal performance. However, Nigeria’s refineries have historically gone for over a decade without such critical interventions.
Ojulari pointed out several technical and administrative failures:
- The “Stop-Start” Cycle: Refineries are delicate mechanical ecosystems. When they are shut down for long periods and then restarted without meticulous restoration, the equipment suffers accelerated wear and tear.
- Lack of Experienced Personnel: The exodus of highly skilled technical experts to the private sector and international firms has left the state-owned facilities with a significant talent gap.
- Bureaucratic Bottlenecks: Unlike private refineries, government-owned plants are often slowed down by cumbersome procurement processes, making it difficult to acquire specialized spare parts in a timely manner.
The expert argued that the issue is less about who owns the refineries and more about who manages them. He noted that for these assets to become productive, the government must move away from direct administrative control. The successful model seen in other climes involves the government retaining ownership while handing over operations and maintenance to specialized private firms with proven track records.
The contrast with the recently inaugurated private refineries, such as the Dangote Refinery, highlights the efficiency gap. While private entities prioritize profit and operational uptime, state-run facilities have historically been plagued by political interference and a lack of accountability for non-performance.
The inability of these refineries to come back online has had a devastating impact on the Nigerian economy.
- Foreign Exchange Pressure: Nigeria continues to spend a significant portion of its foreign reserves importing refined petroleum products that could easily be produced domestically.
- Inflationary Pressures: The cost of importing fuel, coupled with international shipping and landing costs, directly translates to higher prices at the pump, which in turn drives up the cost of food and transportation.
- Job Losses: The non-functional state of these facilities means thousands of potential jobs in the downstream sector ranging from chemical engineering to logistics—remain non-existent.
Conclusion
Understanding why government refineries are not working is the first step toward a genuine solution for Nigeria’s energy sector. Mohammed Ojulari’s insights suggest that until the NNPC adopts a “Maintenance and Operations” (M&O) contract model with reputable international partners, the refineries may remain a drain on the national treasury. As the Federal Government continues to announce new dates for the commencement of operations at the Port Harcourt refinery, the public remains cautiously optimistic, hoping that structural changes will finally match the rhetoric of reform.