…150,000 bpd complex to begin mid-2025
…Tinubu urges Warri & Kaduna refineries’ restart
The long-awaited restart of the Port Harcourt refinery, one of Nigeria’s oldest oil processing facilities, is set to bring much-needed relief to the nation’s foreign exchange (forex) market, experts say.
This development comes after 22 years of turnaround maintenance and marks a critical step in reducing the country’s dependence on imported petroleum products.
The refinery, which is located in the oil-rich Niger Delta region of Nigeria, started operations in 1965 and has undergone extensive rehabilitation since 1999. Initial restoration efforts began in 2021, funded by a $1.5 billion loan agreement with international partners.
Read also: 150,000 bpd Port Harcourt Refinery Complex to begin mid-2025
On Tuesday, trucks began loading petroleum products which include premium motor spirit (PMS) or petrol, automotive gas oil (AGO) or diesel and household kerosene (HHK) or kerosene, while other product slates would be dispatched as well.
Farouk Ahmed, chief executive of the Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA), assured that products will be available nationwide.
He said: “What is important now is there is competition and there is a choice because all along we have been talking about choice, competition, availability, and affordability and we will see the prices of petroleum products coming down because there is ample supply.
“With the Dangote and Port Harcourt Refineries on stream, we hope the refinery will continue to sustain the current production level and be a net exporter of petroleum products rather than a net importer.
“We are hoping that the second part of the new refinery will come on very soon so that we can complement all the product availability in the country.”
Gillis Billy-Harry, national president of the Petroleum Retail Owners Association of Nigeria (PETROAN) said, “I am currently headed to the meeting inside the refinery with senior government officials and hopefully this development will enable further downward trend in pricing since we have more refineries coming on board to enhance competition in the deregulated petroleum downstream sector.
“Export, shipping, trains-shipment costs, and insurance are the costs that Nigeria won’t be paying when it refines large chunk of its imported petroleum products locally. Foreign exchange, which we are lacking now, will be saved also. It is a very welcome development for the sector, “he said.
“We will not be spending scarce foreign exchange for PMS import. Hopefully, this will help us save our forex and help in price stability since we now have other refineries such as Dangote Refinery working,” he added.
The Port Harcourt refinery comprises two units, with the old plant having a refining capacity of 60,000 barrels per day (bpd) and the new plant 150,000 bpd, both summing up to 210,000 bpd.
The Nigerian National Petroleum Company (NNPC) revealed that the 150,000 barrels-per-day complex at the Port Harcourt Refining Company (PHRC) is expected to become operational by mid-2025.
Mele Kyari, the group chief executive officer of NNPC, said the commencement of the load-out activities is a monumental achievement for Nigeria, which signifies a new era of energy independence and economic growth for the country.
Read also: Port Harcourt refinery resumes crude oil refining after 5 years of shutdown
Kyari revealed that the existing refinery complex, which has now resumed full operations, is capable of loading 200 trucks daily with a variety of petroleum products.
He attributed delays in the completion of the new facility to the need for a comprehensive overhaul of machinery, emphasising that the equipment being installed is entirely new.
Kyari also addressed concerns about the dilapidated Eleme Road leading to the refinery.
The poor state of the road has raised fears of severe traffic congestion once regular truck operations commence. Kyari assured stakeholders that the road has been incorporated into the NNPCL-led tax credit scheme, under which the company undertakes road repairs across the country in exchange for tax waivers
President Bola Tinubu, on Tuesday, congratulated NNPC on the successful revitalisation of the Port Harcourt Refinery.
Tinubu also urged NNPC Limited to expedite the scheduled reactivation of the second Port Harcourt refinery and the Warri and Kaduna refineries.
Bayo Onanuga, special adviser to the president on information and strategy, revealed this in a statement made available to journalists in Abuja on Tuesday.
Sceptics’ suspicion
Past attempts at revitalising the refinery were plagued by cost overruns, delays, and allegations of graft.
The spending of $1.5 billion for repair of Port Harcourt refinery, $897.6 million for repair of Warri refinery and $586.9 million on the Kaduna refinery repair raises eyebrows, with critics questioning whether it is a profitable venture considering Nigeria’s precarious fiscal challenges.
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.
“NNPC Ltd did not do much construction of any sort in the 30 years between 1990 and 2020 and a lot of organisational knowledge has certainly been lost in this period,” said Dimeji Bassir, an oil and gas industry executive.
Read also: PetroChina set to close biggest refinery in 2025
“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,” he added.
A report by the Nigerian Extractive Transparency Initiative (NEITI) puts the average capacity utilisation of Nigerian four refineries at 8.55 percent in 21 months. In the period, there was no production for seven months.
Former President Olusegun Obasanjo said the running of state-owned refineries is shrouded in ‘corruption.’
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 shows that the federal government has spent at least N400 billion on the refineries in the last 16 years.
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.
In 2009, Mohammed Sanusi Barkindo, the then-group managing director of the NNPC, also announced that the corporation spent $200m on the maintenance of the Kaduna refinery.
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