NNPC refineries may never work again — Dangote

The President of the Dangote Group, Alhaji Aliko Dangote, has doubted the possibility of the state-owned Port Harcourt, Warri, and Kaduna refineries functioning again.

Dangote also stated that the refineries, which are under the management of the Nigerian National Petroleum Company Limited, had gulped up to $18bn, yet have refused to work.

The billionaire businessman spoke on Thursday while hosting members of the Global CEO Africa from the Lagos Business School, after a tour of the Dangote Petroleum Refinery in Lekki, Lagos.

According to Dangote, the 650,000-capacity Dangote refinery, which he built after the government of late President Umar Yar’adua aborted his acquisition of the government refineries now has over 50 per cent of its output dedicated to Premium Motor Spirit (petrol), saying that even government refineries committed just 22 per cent of their production to petrol.

Dangote recalled how he and his team had to return the refineries to Yar’adua, a few months after former President Olusegun Obasanjo left office in 2007.

According to him, the former managers of the refinery had told Yar’Adua that Obasanjo sold the facilities below their costs as a parting gift to him.

“The refineries that we bought before, which were owned by Nigeria, were doing about 22 per cent of PMS. We bought the refineries in January 2007. Then we had to return them to the government because there was a change of government.

“And the managing director at that time convinced Yar’adua that the refineries would work. They said they just gave them to us as a parting gift or so. And as of today, they have spent about $18bn on those refineries, and they are still not working. And I don’t think, and I doubt very much if they will work,” he said.

Dangote emphasised that the turnaround maintenance of the refineries was like trying to modernise a car built 40 years ago, when technology has advanced.

“(The turnaround maintenance) is like you trying to modernise a car that was built 40 years ago, when technology and everything have changed. Even if you change the engine, the body will not be able to take the shock of that new technology engine,” he stated.

Dangote’s comment buttressed Obasanjo’s comments last year about the refineries, two of which were shut down again after they were declared operational by the former NNPC Group Managing Director, Mele Kyari, in Q4 2024.

Obasanjo had stated that the NNPC was aware that it could not operate the refineries, saying international oil companies like Shell once refused to run the facilities when he requested them to do so.

According to Obasanjo, some Nigerians, including Aliko Dangote, once paid $750m to take over the refineries; however, his successor, Yar’adua, aborted the deal.

“I ran to him (Yar’Adua), I said, ‘You know this is not right’. He said, ‘Well, NNPC said they can do it.’ I said, ‘NNPC cannot do it,’ I told my successor that ‘the refineries, from what I heard and know, will not work and when you want to sell them, you will not get anybody to buy them at $200m as scrap’. And that is the situation we are in.

“So, why do we do this kind of thing to ourselves? NNPC knew that they could not do it, but they knew they could eat and carry on with the corruption that was going on in NNPC. When people were there to do it, they put pressure. In a civilised society, those people should be in jail,” Obasanjo had stated.

Again, in January, Obasanjo said, “I was told not too long ago that since that time, more than $2bn have been squandered on the refineries and they still will not work.

“If a company like Shell tells me what they told me, I will believe them. If anybody tells you now that it (the refinery) is working, why are they now with Aliko (Dangote)? And Aliko will make his refinery work; not only make it work, he will make it deliver.”

Obasanjo concluded with a Yoruba proverb, comparing inflated claims about the refineries’ performance to a farmer who planted 100 heaps of yam but falsely claimed to have planted 200.

“They say that after he has harvested 100 heaps of yams, he will also have 100 heaps of lies. You know what that means,” he said.

Calls for the privatisation of the government-owned refineries, under the management of NNPC, intensified following the recent shutdown of the 60,000 barrels-per-day old Port Harcourt refinery, six months after it was declared operational.

The Warri refinery was also shut down one month after the former Group Chief Executive Officer of the NNPC, Mele Kyari, declared it open in December. The Manufacturers Association of Nigeria said the refineries were a drain on the country’s economy, calling on the Federal Government to sell off the facilities.

Crude refiners also advised the government to sell the refineries as scrap and use the proceeds to fund modular refineries, saying the facilities were a burden and liability to the government.

The PUNCH reports that the Federal Government has consistently expended resources on the refineries, which went moribund many years ago. It was gathered that $1.4bn was approved for the rehabilitation of Port Harcourt refinery in 2021; $897m was earmarked for Warri and $586m for Kaduna refineries.

N100bn was reportedly spent on refinery rehabilitation in 2021, with N8.33bn monthly expenditure. $396.33m was spent on Turnaround Maintenance between 2013 and 2017. Despite all the financial allocations, the refineries remain unproductive at the moment.

The NNPC could not be reached at the moment. Despite not having a spokesman at the moment, the contacts on its website were not reachable. Messages sent to the lines were not responded to, up till when this report was filed.

Dare Olawin|PUNCH Newspaper