Nigeria’s iconic Port Harcourt Refinery, once a symbol of the nation’s industrial ambition, is facing intense scrutiny despite a $1.5 billion overhaul to revamp its operations and restore public confidence.
This skepticism is amplified by Nigeria’s history of failed attempts to revive its refineries. Between 2015 and 2019 alone, over $3 billion was reportedly spent on fixing the country’s four refineries such as Port Harcourt ($1.5bn); Warri ($897.6m) and Kaduna refinery ($586.9m) with little to show for it.
News broke in Africa’s biggest economy that the oil arm of Port Harcourt refinery, which can produce 60,000 barrels of products per day, had been successfully rehabilitated and that 200 trucks were loading products for distribution to various parts of the country.
Read also: Port Harcourt Refinery concedes scaling back operations for upgrade
This milestone came after decades of unfulfilled promises and several missed deadlines since initial rehabilitation efforts commenced in 1999.
The current phase, funded by a $1.5 billion loan from international partners, aims to address years of neglect that left the refinery dormant and dependent on crude imports to meet Nigeria’s fuel demands.
NNPC had initially failed to make public the litres of petrol, diesel, jet fuel, and naphtha the refinery would roll out, in negation of global best practices. However, citing public criticism, the national oil company later said it was refining 1.4 million litres of petrol per day
Despite these promises, the refinery’s chequered past looms large.
Critics argue that the hefty rehabilitation costs may outweigh the benefits. Questions persist about whether the investment can be recouped, given Nigeria’s precarious fiscal situation and the refinery’s historical inefficiencies.
They point to the refinery’s history of breakdowns and operational inefficiencies, suggesting throwing money at it might be akin to pouring water into a sieve.
For example, the Nigerian Extractive Industries Transparency Initiative (NEITI) previously reported that Nigerian refineries operated at an average capacity utilisation of just 8.55 percent over 21 months.
Industry sources say the prospect of Port Harcourt Refinery running at its nameplate capacity is in doubt as it would at best reach 40 percent to 50 percent of capacity.
“Nigerian National Petroleum (NNPC) Ltd did not do much construction of any sort in 30 years between 1990 and 2020 and a lot of organisational knowledge has certainly been lost in this period,” a senior source in the oil and gas industry said.
“We can infer therefore that the refinery revamp projects being spearheaded by NNPC are much bigger than the individuals leading them, particularly with little to no operational history to leverage—in planning and executing the projects—along with ingrained cultural inefficiencies to contend with,” the source added.
Read also: Port Harcourt Refinery pumps fuel without price
Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies, said refining operations are complex with extremely tight unit economics. She struggles to understand the government’s insistence on operating the refineries rather than handing them over to the private sector.
“Unlike bureaucratic government workers, the investors will manage them efficiently, leading to improved productivity, better maintenance of the facilities and job creation,” Mohammed said from Nigeria’s commercial capital.
BusinessDay’s findings showed of the 18.1 million barrels per day (bpd) of crude are refined in the United States as per official data.
“Rather than have public workers, private investors could bring in new technologies and invest in upgrades that can modernise the refineries, making them more competitive and environmentally friendly,” Mohammed added.
The latest data from Wood Mackenzie, shows that as the energy transition progresses, “refineries face an increasingly Darwinian battle for existence.”
In its report, the consultancy firm said that flexibility and integration of oil refining and petrochemical production would be vital for the downstream industry in the future.
Media reports on Sunday showed the Port Harcourt Refinery ceased operations, with its loading bay reported to be empty.
However, the refinery clarified that its operations were not completely halted but scaled down to facilitate improvements at the facility.
During a guided tour of the Port Harcourt refinery led by its managing director, Ibrahim Onoja, Moyi Maidunama, the executive director of operations, at Nigerian Pipeline and Storage Company Limited, said the plant was working.
Maidunama told journalists there was a temporary hitch in operations, but explained that the reduction in operations was necessary to address technical issues and enhance capacity.
Read also: NNPC clarifies community leader claim, says Port Harcourt refinery now 90% operational
“So, the operations were not halted. It was reduced due to some improvements that we needed to make. We are managing the process with the number of trucks available today, using a few loading arms for evacuation. This should be resolved soon.”
The Petroleum and Natural Gas Senior Staff Association of Nigeria ( PENGASSAN) also confirmed that the Port Harcourt Refinery was functional.
Festus Osifo, president of PENGASSAN, told Arise TV that Nigerians have every reason to doubt and question the government, considering what they had suffered at the hands of past governments.
“As Nigerians, we have every reason to doubt the government. We have every reason to question assertions from governments because, over the years, they have actually let us down.
“Having said that, for us in PENGASSAN, it is part of what we are going to address tomorrow in our National Executive Council meeting.”
Explaining the production processes in the refinery, he said, “Really, from our checks, the Port Harcourt refinery is actually working.
“What Nigerians should be interested in today is, is the Port Harcourt refinery producing AGO? The answer is yes. Is the old Port Harcourt refinery producing kerosene? The answer is yes. Is it producing PMS today? The answer is yes.”
Money guzzlers
An analysis of documents submitted by the NNPC to several legislative committees’ hearings on the subject matter, press statements and clarifications by past oil ministers, heads of the corporation and media reports, showed that the Federal Government has spent at least N400 billion on the refineries in the last 16 years.
Read also: NNPC accused of loading old stock from PH Refinery, not fresh products
This is different from about $308 million reportedly spent for the same purpose by the military governments of the late General Sani Abacha ($216 million) and retired General Abdusalami Abubakar ($92 million).
Soon after the late President Musa Yar’Adua stopped the sale of the refineries in 2007, the NNPC reportedly announced that it had awarded a contract to a Nigerian firm to carry out comprehensive turnaround maintenance on all the refineries. The contract sum was said to be $57m.
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