The Nigerian National Petroleum Company Limited (NNPC Ltd.) has stopped operations at all state-owned refineries following comprehensive internal reviews that revealed systemic financial drain and loss of value. The decision was announced by NNPC’s Group Chief Executive Officer, Bashir Bayo Ojulari, at the Nigeria International Energy Summit in Abuja.
NNPC’s assessments found that the refineries were operating at significant loss levels and destroying national value.
The evaluations covered the Port Harcourt, Warri and Kaduna facilities, which have long struggled to run at meaningful capacity despite repeated and costly rehabilitation attempts over many years.
According to Ojulari, these state assets have absorbed public funds without delivering the anticipated economic returns. He said the refineries were running at low utilisation rates, often 50 to 55 per cent, while operational expenses and contractor costs grew unchecked, creating a persistent gap between input costs and output value.
“When we came in, refineries were a hot topic. Nigerians were angry, expectations were very high, and we were under extreme pressure.”
This financial reality prompted NNPC leadership to confront the untenable economics of continuing downstream operations under the existing structure. Sustained political pressure to keep refineries running, justified by arguments about domestic supply needs, had obscured fundamental weaknesses in refinery performance for decades.
“After a detailed review, it became clear that we were simply wasting money.”
The CEO emphasised that the losses were not temporary or isolated. Internal reviews showed no credible path to profitability under current models. The facilities were producing mainly lower-value products relative to the crude feedstock, further exacerbating the economic drain.
“When we looked at the net outcome, we were leaking value with no clear line of sight to profitability.”
The suspension of refinery operations is intended to halt further value erosion and allow NNPC to reassess strategic options. Management plans to explore partnerships with experienced refinery operators who can bring technical expertise and commercial discipline to the downstream business. This includes exploring equity arrangements that align incentives with long-term performance rather than short-term contracting.
NNPC’s strategic pivot marks an acknowledgment that previous approaches focused heavily on financing and construction contracts, often at the expense of operational execution and maintenance integrity.
Industry observers note that Nigeria’s four state-owned refineries have historically failed to sustain output and efficiency, forcing the country to rely heavily on imported refined petroleum products. Billions have been spent on turnaround projects, yet domestic refining capacity has remained largely underutilised.
In this context, NNPC’s decision reflects a shift toward commercial pragmatism. The company plans to leverage the capacity of private refineries, including the large Dangote Refinery, to mitigate supply gaps and reduce dependence on imports while redefining the role of state assets in Nigeria’s energy landscape.
NNPC’s redirection underscores the urgent need for effective management of energy infrastructure and a clear strategy to ensure that public investments generate sustainable economic value for Nigeria.
