In a significant departure from decades of cautious optimism about reviving Nigeria’s moribund refinery sector, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC Ltd), Engr. Bayo Ojulari, has justified the decision to halt operations at the nation’s state-owned refineries as a necessary step to prevent continued economic loss and value leakage.
Speaking on Wednesday at the 2026 Nigerian International Energy Summit (NIES) in Abuja, Ojulari said recent internal assessments showed that the Port Harcourt, Warri, and Kaduna refineries were not only unprofitable but were systematically destroying value for Nigeria.
“When we looked at the net outcome, we were leaking value with no clear line of sight to profitability,” he stated, describing the situation as untenable.
Economic Rationale: From Loss to Strategic Pause
According to the NNPC boss, the refineries were operating at an average 50–55% capacity utilisation despite monthly crude allocations — a pattern that steadily eroded revenue due to high operational and contractor costs.
He noted that the refineries were producing mostly mid‑grade products whose combined market value failed to justify the cost of crude input — a scenario that would have locked Nigeria into decades of value erosion if allowed to continue unchecked.
Ojulari further disclosed that the decision to halt operations was made in spite of intense political pressure to keep the facilities running, underscoring a break from past leadership approaches that prioritized continuity over commercial viability.
Governance Shifts and Policy Implications
Analysts say the admission by the NNPC CEO that the company “lack(s) the capacity to run refineries profitably” marks a watershed moment in Nigeria’s downstream petroleum policy.
For decades, Nigeria has struggled to turn around its refining assets despite billions of dollars in rehabilitation and maintenance costs, while importing most of its refined petroleum products. This has cost the economy foreign exchange and contributed to persistent fuel price volatility.
Several industry watchers see Ojulari’s candour as a response to long‑standing criticisms over mismanagement and weak oversight, with the new strategy anchored on commercial realism rather than political symbolism.
Towards Partnerships and Technical Expertise
Rather than outright privatisation, the NNPC has signalled a shift towards equity partnerships with experienced global refinery operators. Under this model, prospective investors would acquire stakes in selected facilities, bringing in technical competence, operational discipline and financial sustainability.
Discussions are reportedly underway with a leading Chinese petrochemical firm, which has expressed interest in inspecting and potentially partnering on one of the refinery assets in a bid to reverse decades of underperformance.
Ojulari emphasised that the strategy is not about selling national assets but about infusing the refineries with “skin in the game” operators who can make them economically viable.
Strategic Context: Dangote Refinery and the Domestic Market
NNPC’s recalibration comes against the backdrop of Dangote Refinery’s successful commercial operations, which have eased some pressures on Nigeria’s fuel supply chain. Ojulari acknowledged that the Dahgote facility’s emergence has afforded NNPC the flexibility to reconsider its own refinery plans without risking market disruptions.
Observers note that while this presents Nigeria with a more commercially driven downstream structure, it also places a premium on robust regulatory oversight to ensure fair competition and consumer protection.
Public Expectations and Future Outlook
The shutdown has reignited debates over energy security, job losses in refinery host communities and the broader downstream reform agenda. Critics argue that while the move may make economic sense, the federal government must expedite clear frameworks for partnership models and transparency in negotiations to avoid further public distrust.
Stakeholders in the oil and gas sector are now watching closely how NNPC navigates this crucial transition — balancing commercial imperatives with national development goals and ensuring that Nigeria’s refining aspirations are not repeatedly undermined by structural inefficiencies.
