NNPCL Embraces Private Partnerships to Revitalize Nigeria’s State-Owned Refineries
The Nigerian National Petroleum Company Limited (NNPCL) has officially announced its intention to collaborate with private refining firms as part of a strategic initiative to restore the country’s dormant state-owned refineries. This move signals a shift towards sustainable and commercially viable refinery operations after years of operational challenges.
Addressing Years of Underperformance
NNPCL’s Group Chief Executive Officer, Bayo Ojulari, revealed during a meeting with the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Abuja that prolonged neglect had severely impacted refinery profitability. The nnpcl-chief-over-allegedly-missing-n210tr/” title=”Senate summons … chief over allegedly missing N210tr”>company has resolved to cease investing in facilities that consistently incur losses without professional management involvement.
Reconsidering Divestment Options
While Ojulari previously mentioned that selling assets like the Port Harcourt Refining Company was a possibility, he later clarified that such a sale would be “ill-advised and sub-commercial” at this stage. The final decision will depend on the outcomes of comprehensive technical and commercial evaluations currently underway, with alternative management strategies also being explored.
Findings from Recent Reviews
Following detailed assessments, NNPCL concluded that operating the refineries independently is financially unsustainable. Ojulari explained, “Our commercial review of the Port Harcourt refinery showed that partnering with an experienced refining company is the most viable path forward.”
He highlighted that the refineries were losing between $300 million and $500 million annually. For instance, at Port Harcourt, despite handling approximately 950,000 barrels of cargo, less than 40% of the input was effectively processed into mid-grade products, which were sold at a loss.
Strategic Shift Towards Professional Partnerships
Rather than continuing to patch failing systems, NNPCL aims to establish partnerships with expert operators to ensure long-term sustainability. This approach is expected to introduce advanced training programs for young engineers and technicians, aligning workforce skills with modern refining technologies.
Government’s Support and Clear Mandate
President Bola Tinubu has not pressured NNPCL to maintain refinery operations at any cost. Instead, he has tasked the company with developing rehabilitation plans that are both commercially viable and technically sound. Ojulari emphasized, “The directive is clear: our efforts must be sustainable; there is no room for pretense.”
Infrastructure Upgrades and Cost Optimization
In addition to seeking partnerships, NNPCL is actively working to resolve bottlenecks in critical infrastructure, including aging pipelines that limit production capacity. The company also plans to streamline maintenance contracts across subsidiaries to reduce operational expenses.
Union Support and Calls for Proven Models
Comrade Festus Osifo, president of PENGASSAN, praised Ojulari’s pragmatic approach to refinery reform. He reiterated the union’s advocacy for adopting a model similar to that of Nigeria Liquefied Natural Gas (NLNG), which has demonstrated success through shared ownership and reduced political interference.
Osifo stated, “If experienced refining companies acquire stakes in our refineries while NNPCL retains a minority share, it will foster sustainable operations and minimize political disruptions.” He assured full union support for the reform agenda, emphasizing collaboration to maintain system stability.
Ambitious Production Targets
Highlighting the need for increased crude output, Osifo noted that Nigeria currently produces about 1.8 million barrels per day. He expressed optimism that with the right reforms and investments, production could rise to 2.5 million barrels per day by the following year, boosting the country’s energy sector and economic prospects.
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