NNPC Orders Shutdown of State Refineries Over Value Leakage Concerns — Ojulari

Nigeria’s NNPC Ltd. has ordered the shutdown of the country’s state-owned refineries after internal assessments showed they were running at “monumental losses” and destroying national value, according to Group Chief Executive Officer Bashir Ojulari.

Ojulari disclosed this during a fireside chat on securing Nigeria’s energy future at the Nigeria International Energy Summit in Abuja on Wednesday, saying the company’s decision was driven by hard numbers, not politics.

Why NNPC pulled the plug

Ojulari said his leadership team met the refinery issue at peak public anger, following years of heavy spending and repeated rehabilitation promises that failed to translate into reliable output.

“When we came in, refineries were a hot topic. Nigerians were angry, expectations were very high, and we were under extreme pressure.”

He said the company carried out a detailed technical and commercial review and concluded the economics did not work.

In practical terms, he explained that even though crude oil was supplied monthly, capacity utilisation averaged only 50–55%, while operating expenses and contractor costs kept rising, making continued operations unjustifiable.

The core problem: spending without sustained performance

Nigeria’s state refineries in Port Harcourt, Warri, and Kaduna have struggled for decades, despite repeated turnaround maintenance efforts and billions of naira in public spending.

Ojulari’s criticism is direct: successive efforts focused heavily on financing and EPC contracts, but not enough on long-term operations and maintenance that keep a refinery stable. The structure, he argued, allowed “multiple layers of contractors” to extract value without being accountable for sustained performance.

He also pointed to product quality and economics: the refineries increasingly produced mid-grade petroleum products whose market value did not justify the quality and cost of the crude supplied, meaning that even when the plants ran, they still eroded value rather than creating it.

What changes now: equity partners, not contractor-led operations

Ojulari said his team had to climb what he called a “vertical learning curve” on downstream economics, coming from an upstream background. But the lesson, in his telling, is clear: without real ownership risk, operators and contractors have little incentive to deliver durable performance.

NNPC’s new direction is an equity partnership model with experienced refinery operators. Under this plan, partners would take equity stakes, run day-to-day operations, and help rebuild local technical capacity inside Nigeria’s refining system. Ojulari insisted this is about commercial sustainability, not asset stripping.

He said discussions are already ongoing with potential investors, including a major Chinese petrochemical company, and that site inspections are expected soon.

Dangote’s refinery bought NNPC breathing space

Ojulari also credited the Dangote Refinery with easing pressure on Nigeria’s energy system and giving NNPC room to make less rushed decisions.

“Whether you love Dangote or hate him, thank God for the Dangote Refinery.”

The bigger context: pressure is not going away

NNPC’s comments land in the middle of sustained scrutiny over the fate of the refineries and the wider downstream reform agenda.

• There were reports in October 2025 that NNPC began a detailed technical and commercial review of its three major refineries to determine operational and financial viability.
  
• In August, Independent Petroleum Marketers Association of Nigeria publicly challenged Ojulari to fix the Port Harcourt refinery or resign, after delays stretched far beyond an initially stated 30-day repair timeline.
  
• In June, NNPC ruled out selling the Port Harcourt Refining Company, restating its commitment to rehabilitation and retaining ownership.
  
• In December, Nigerian Economic Summit Group renewed calls for fast-tracked privatisation, arguing it would boost domestic refining and cut import dependence.