There was political pressure to keep loss-making refineries – NNPC’s CEO

Nigerian National Petroleum Company (NNPC) has disclosed he faced intense political pressure to keep loss-making refineries running, in a rare public acknowledgement of the tensions between commercial imperatives and government demands at Africa’s largest petroleum producer.

Bayo Ojulari, group chief executive of the Nigerian National Petroleum Company Limited, told an industry gathering this week that politicians and stakeholders had pushed hard to maintain refinery operations despite mounting losses, but insisted his management team had prioritised profitability over political expediency.

“There were political pressures to keep the refinery running. There was a lot of pressure,” Ojulari said at the Nigerian International Energy Summit in Abuja on Wednesday, describing the dilemma facing executives “trained for over 35 years with blinkers on to look at commerciality and profitability.”

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“You can’t sleep with that. It’s not possible,” he added, explaining why NNPC ultimately decided to halt operations for assessment despite the political backlash.

The unusually candid remarks lay bare the commercial challenges confronting state-owned enterprises in Nigeria, where policy decisions are often driven by political considerations rather than financial logic. NNPC has historically served as “supplier of last resort” for petroleum products, creating pressure to maintain operations regardless of cost.

Ojulari conceded the state oil giant is “fundamentally unequipped” to operate profitable refineries, revealing that plants were running at utilisation rates as low as 50-55 per cent whilst converting valuable crude into lower-grade products worth less than the feedstock.

“We were spending a lot of money on operations, a lot of money on contractors, but if you look at the net, we’re just leaking away a lot of value,” he told the conference, describing how government spending on refineries and contractors bore no relation to the value generated.

The NNPC chief said there had been “no clarity” on how the company would reverse losses or achieve profitability, unlike typical investment scenarios where management has “a line of sight to where you’re going to recover.”

Nigeria’s state refineries have consumed billions of dollars in maintenance spending over decades, whilst failing to achieve consistent production, forcing the major crude exporter to previously import refined products to meet domestic demand, a source of national embarrassment and forex pressure.

Ojulari identified a fundamental strategic failure in previous turnaround attempts, which focused on securing financing and engineering contractors whilst neglecting operational excellence. He said NNPC was left holding assets for “20, 30 years” after financiers and contractors took their profits and departed.

“You end up with financing, EPC, O&M, all of them taking money from the system without any skin in the game. There’s no way you can sustain any business like that,” he said, referring to engineering, procurement, construction and operations-and-maintenance contracts.

The company has now adopted a board-approved strategy to secure joint venture partners with proven refinery operating track records. “We’re not looking for contractors. We’re looking for an entity that runs refineries,” Ojulari emphasised.

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The reset comes amid broader upheaval in Nigeria’s petroleum sector, including the recent removal of fuel subsidies and the start-up of Aliko Dangote’s $19bn private refinery, the largest single-train facility in the world, which has intensified scrutiny of NNPC’s downstream performance.