FG to privatize refineries, attract investment, boost competition in oil sector

The federal government has signaled plans to privatize its state-owned refineries to attract investment and enhance competition in the downstream oil sector.

The disclosure was made by the special adviser to president Bola Tinubu on energy, Olu Verheijen, during an interview on the sidelines of the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) on Tuesday November 4.

Verheijen said that letting go of the refineries owned by the Nigerian National Petroleum Company Limited (NNPCL) is one of several reform options the government is exploring to reposition the energy sector for sustainable growth.

Verheijen said, “It’s one of the options that you have to consider if you find the right technical partner with the right capital.

“The plants have largely been sustained by subsidies, but now that we’ve removed the subsidies, we’ve removed the distortions in that market.”

Nigeria’s four state-owned refineries in Port Harcourt, Warri, and Kaduna, with a total installed capacity of 445,000 barrels per day, have remained mostly idle for decades despite multiple costly turnaround maintenance efforts.

According to Verheijen, president Tinubu’s reform agenda seeks to restore efficiency and transparency in the petroleum sector by ensuring operations are driven by commercial principles.

The NNPCL recently revealed plans to partner with experienced technical equity firms to manage and operate the refineries to international standards.

The NNPCL Chairman Executive Officer (CEO) Bayo Ojulari, expressed optimism about achieving full refinery functionality, while noting that a future Initial Public Offering (IPO) remains part of the government’s long-term vision for NNPC’s transformation into a transparent and efficient commercial entity.

Potential investors will face competition from Aliko Dangote’s 650,000-barrel-per-day refinery, which already produces more fuel than Nigeria consumes and plans to expand capacity further.

Despite ruling out the sale of the Port Harcourt Refining Company in June, NNPCL has yet to resume operations at the plant, which was shut down for a scheduled 30-day repair on May 24, now extended beyond 80 days without notable progress.