NIGERIA: Fresh controversy may be brewing over the future of Nigeria’s critical assets like the refineries and steel plants, as new developments suggest the Nigerian National Petroleum Company Limited (NNPC Limited) may face stiff investor resistance and mounting financial and political fallout if proposals to sell the assets go ahead without value that can offset the existing debt profile.
This comes as contractors handling the refineries were suspended amid rising tensions between the NNPC, anti-graft authorities and the government, reports The Guardian.
Stakeholders told our correspondent that Nigeria’s refineries may only attract scrap value if put up for sale, adding that managing the debt will likely require tough restructuring talks with lenders, possible government intervention, or private sector partnerships.
Even with divestment, they noted, proceeds may fall well short of covering outstanding obligations, posing a serious threat to the country’s fiscal stability and NNPC’s reputation amidst a litigation crisis that may stall the process.
Also, nearly 50 years after it was conceived as a symbol of Nigeria’s industrial ambition, the Ajaokuta Steel Complex remains inactive, despite trillions of naira in public funds and producing no steel.
While the actual amount spent on the refineries’ turn-around maintenance remained contentious with many stakeholders throwing around figures that may not be verifiable, media reports suggest that about $25 billion has been spent, while Dangote recently said $18 billion has been spent.
Based on public data, the Federal Executive Council (FEC) approved $2.9 billion for the current rehabilitation of the refineries, $50 million was paid to contractors before the FEC approval for refinery audits, while the National Assembly claimed another $396 million was spent in five years. This amounts to $3.4 billion (N5.2 trillion) in expenses on the refineries in the last five years.In 2023, the ninth National Assembly said Nigeria spent more than N11.35 trillion on fixing the country’s three moribund refineries in the past 10 years.
Between 2016 and 2024, the federal government spent about N1.43 trillion on the Ajaokuta facility through salaries, settlements, and various “revival” efforts. Yet, the plant has never produced steel commercially.
From 2016 to 2023, N29.35 billion was spent on personnel costs alone, covering salaries, pensions, and overheads for thousands of staff at the non-operational plant.
The biggest spending claims came during the final year of former President Muhammadu Buhari’s administration. In 2022, Buhari said $400 million (N611.4 billion) had been spent under his leadership to “transform” the plant, though it remained idle.
In February 2024, the senate revealed that the federal government had paid $496 million (N758 billion) to Global Infrastructure Holdings Ltd (GINL), a company previously in a legal dispute with Nigeria over a failed concession of Ajaokuta.
The out-of-court settlement, made in September 2022, raised new questions about transparency in the handling of the project. In May 2024, President Bola Tinubu approved another N35 billion to revive the Light Mill Section (LMS) of the plant, a smaller part of the complex with limited commercial value.
NNPC’s position on its refineries came a few hours after comments by the President of Dangote Group, Aliko Dangote, that the NNPC Refineries may never work again.
Group Chief Executive Officer of NNPC Ltd, Bayo Ojulari, had disclosed that the company was reassessing its entire refinery strategy and may take a different direction following a comprehensive internal review expected to be concluded by the end of 2025, which may include selling the refineries.
Ojulari spoke during an interview with Bloomberg on the sidelines of the 9th Organisation of the Petroleum Exporting Countries (OPEC) international seminar in Vienna, where he described the ongoing overhaul of Nigeria’s ageing refineries as increasingly complex and fraught with technical setbacks.
Sources, however, told our correspondent that the new management team is allegedly seeking to categorise funds paid to an Italian engineering firm (name withheld) as fraudulent to recover the money via the Economic and Financial Crimes Commission (EFCC).
The plan, the insider said, is to then proceed with the sale of the refinery for scrap value. According to the source, the Port-Harcourt refinery was abruptly shut down, not necessarily for maintenance, but after the Managing Director claimed he could not load kerosene via vessel because of a faulty Jetty and pipeline that required repairs estimated at $300,000. The fix was projected to take just three days. However, with tanks from refined products reaching capacity, production was halted entirely.
The development, which has sparked a standoff between former NNPC managers, the current team, and political leaders, may stall progress on the refineries, which have remained political for decades.
Many stakeholders, who spoke with our correspondent, fear that, in their current state, the refineries are unlikely to attract credible buyers capable of offering enough value to offset the existing liabilities, raising concerns that lenders could be left with another set of bad loans.
With a $3 billion rehabilitation contract already committed and a debt burden of N4.4 trillion tied to the three refineries, according to recent audited financial records of the state oil firm, sources within the company, speaking on condition of anonymity, alleged that the management is merely executing a predetermined plan.
A document obtained by our correspondent revealed that the announcement on 24 May 2025, stating the refinery would be shut down for “planned maintenance”, stemmed from the need to repair a jetty and pipelines, estimated to cost around $300,000 and expected to take just three days.
The document also showed that seven units previously delivered by the contractor remain inactive and that nothing has happened in the two months since the shutdown, despite NNPC’s promise to be transparent and provide regular updates.
At the time of this publication, our correspondent reviewed documents signed by Lead, Product Dispatch and Optimisation, Bipialaka BJ, indicating the facility held stock of over 100 million litres of Automotive Gas Oil (AGO), 70 million litres of Household Kerosene (HHK), and another 100 million litres of Low Pour Fuel Oil (LPFO), collectively valued at around $300 million.
Further pressure is building over who should audit the refinery, as stakeholders are resisting moves to appoint KPMG, insisting instead on engaging a firm with specific expertise in refinery operations.
While the NNPC currently has no official spokesperson, our correspondent contacted the Executive Vice President of NNPC Downstream, Mumuni Dagazau, who has been linked to the OVH Energy acquisition and is seen as a key figure in the current crisis, but he did not respond to enquiries regarding the status of the Port Harcourt Refinery and the planned maintenance.
This paper went further to contact NNPC Refineries Coordinator, Bayo Aderenle, who equally failed to respond to enquiries.
The current repairs of Port-Harcourt Refinery were awarded for $1.5 billion, Warri and Kaduna Refineries for $1.4 billion.
In its financial statement for 2023, NNPC revealed that the country’s refineries are indebted to the tune of N4.5 trillion. The Port Harcourt Refinery currently owes about N1.9 trillion, Kaduna Refinery N1.3 trillion and the Warri Refinery N1.1 trillion. The record of the debt of these assets in the 2022 audited statement showed that Port Harcourt Refinery had a debt profile of N806b, Warri N597b and Kaduna N487b. This implies that the debt of Port-Harcourt Refinery rose by 135 per cent between 2022 and 2023, whereas Kaduna Refinery rose by 166 per cent and Warri Refinery 84 per cent.
Going by NNPC’s financial documents, maintaining Nigeria’s idle refineries costs about N68 billion yearly in salaries, totalling N272 billion between 2021 and 2024. As of 2021, NNPC had 7,338 staff, with 1,603 stationed at the Kaduna, Port Harcourt and Warri refineries. The Kaduna Refining and Petrochemical Company (KRPC) alone has 660 workers, 8.99 per cent of NNPC’s total workforce, while Port Harcourt had 506 staff and Warri 437.
These costs contributed to NNPC’s rising employee benefits, which jumped to N583.8 billion in 2023 from N266.9 billion in 2022, according to the company’s audited report.
A forensic and finance expert, Professor Godwin Oyedokun, warned that the refineries may only attract scrap value if put up for sale, adding that managing the debt will likely require tough restructuring talks with lenders, possible government intervention, or private sector partnerships.
Even with divestment, he noted, proceeds may fall well short of covering outstanding obligations, posing a serious threat to the country’s fiscal stability and NNPC’s reputation.
He attributed the low market appeal of the refineries to years of neglect, outdated technology, and shifting investor interest towards modern modular plants. Still, he acknowledged that a sale or partial privatisation could provide fiscal relief, improve operational efficiency, and allow NNPC to focus on more viable ventures, if handled transparently.
Oyedokun cautioned that lenders could suffer losses unless the government and NNPC renegotiate terms transparently to protect Nigeria’s credit profile and avoid disputes.
Former President of the Chartered Institute of Bankers of Nigeria (CIBN), Prof Segun Ajibola, expressed concern over the deteriorating state of Nigeria’s refineries despite extensive rehabilitation efforts.
Ajibola, who had earlier advocated outsourcing the management of the facilities, said his fears of poor governance, mismanagement, and corruption are being confirmed.
“It is worrisome that after spending so much on repairs, especially on the Port Harcourt refinery, we are back in the trenches,” he said.
He cautioned against selling the refineries in their current state, warning that the country may not recover the N4 trillion in accumulated debts and repair costs. Instead, he renewed his call for reputable international consultants to manage the refineries, insisting that with proper oversight, they can become profitable.
Petroleum economist, Prof Wumi Iledare, cautioned that any sale of Nigeria’s state-owned refineries must be strategic and not driven by sentiment or haste.
He said while NNPC Ltd has the legal right under the Petroleum Industry Act (PIA) to dispose of assets, selling the Port Harcourt, Warri, and Kaduna refineries without addressing deep-rooted inefficiencies would repeat past failures.
“The problem has never been ownership, but poor governance,” Iledare stated, warning that outright sale could harm energy security.
He urged transparent, competitive alternatives like public-private partnerships or performance-based concessions, adding that refining must remain value-driven and aligned with national interests.
Partner at Kreston Pedabo, Olufemi Idowu, says Nigeria’s review of its four state-owned refineries and potential sale could mark a pragmatic policy shift but must be done wisely.
Idowu warned that continued government spending could undermine broader reforms and place further strain on public finances.
He advised that divestment or strategic private sector involvement may be necessary to cut losses and improve efficiency. However, he emphasised the need for a thorough cost-benefit analysis and transparent public communication to maintain trust and avoid backlash.
Energy expert and Chairman of International Energy Services, Dr. Diran Fawibe, argued that there is fundamentally nothing wrong with selling Nigeria’s state-owned refineries if a thorough review finds they are no longer viable.
He recalled that past administrations, notably under President Obasanjo, had attempted to privatise the refineries but were reversed by subsequent governments, resulting in decades of inefficiency, failed turnaround maintenance, and mounting debt.
While he opposed selling the assets as scrap, Fawibe noted that private investors could bring in the capital and operational expertise that the government lacks.
“If good buyers come forward and are willing to invest, that’s preferable to leaving the facilities idle and debt-ridden,” he said. He urged transparency in the review process and stakeholder engagement, particularly with trade unions, and emphasised that decisions must be based on facts, not sentiment.
“We shouldn’t insist NNPC continues managing assets that it admits are not viable,” he said. Fawibe added that Nigeria is no longer in a crisis position, as Dangote Refinery is now operational and some modular refineries are contributing to supply.
“The market is deregulated, and the fuel situation is not as dire as it once was. We can afford to make deliberate, informed decisions about the future of these assets,” he said.
