Nigeria’s oil industry has been plagued by controversy and inefficiency, particularly with regards to its four government-owned refineries. Despite investing over $20 billion in rehabilitation efforts, the refineries continue to struggle, forcing Nigeria to rely heavily on imported refined petroleum products.
The Economic and Financial Crimes Commission has recently launched an investigation into alleged abuse of office and misappropriation of funds by former CEO of NNPC Limited, Mele Kyari, and other officials. Reports suggest that a staggering N80 billion was found in the bank accounts of a sacked managing director of one of the refineries.
The investigation has shed light on the alleged mismanagement of funds meant for refinery rehabilitation. The Federal Government had provided $1.55 billion for the Port Harcourt Refinery, $740 million for the Kaduna Refinery, and $656 million for the Warri Refinery.
Experts argue that the refineries’ struggles are a result of government inefficiency and corruption. They suggest that privatizing the refineries could be the solution, citing the success stories of Eleme Petrochemicals plant and Nigeria LNG Limited.
The Eleme Petrochemicals plant, which was privatized in 2006, has seen significant turnaround under the ownership of Indorama Group. The company invested $130 million in maintenance and capital investment, returning the facility to operational condition and paying dividends to its owners.
Similarly, Nigeria LNG Limited, a joint venture between NNPC and private companies, has grown rapidly since its inception in 1999.
With the downstream sub-sector deregulated, the market is now attractive to local and foreign investors. President Bola Tinubu is urged to consider privatizing the refineries, which would not only bolster government finances but also relieve it of the burden of finding scarce dollars to fund refinery repairs.
By selling the refineries to the private sector, Nigeria can take a significant step towards becoming an oil refining hub, providing petroleum products to the West African sub-region and beyond.
