Nigerian refineries: Waiting for Chinese touch

It must be good news for those who still have faith in Nigeria’s embattled, state-owned petroleum refineries, courtesy of a new deal between the Nigerian National Petroleum Company Limited (NNPCL) and some Chinese companies. The NNPCL, represented by its Group Chief Executive Officer, Bashir Bayo Ojulari, recently signed in the Chinese city of Jiaxing, a […]

It must be good news for those who still have faith in Nigeria’s embattled, state-owned petroleum refineries, courtesy of a new deal between the Nigerian National Petroleum Company Limited (NNPCL) and some Chinese companies. The NNPCL, represented by its Group Chief Executive Officer, Bashir Bayo Ojulari, recently signed in the Chinese city of Jiaxing, a Memorandum of Understanding (MoU) with two Chinese companies namely, Sanjiang Chemical Company Limited and Xingcheng (Fuxhou) Industrial Park Operation and Management Company Limited. Accordingly, the MoU is for collaboration through a potential Technical Equity Partnership (TEP) for the purpose of completion and operation of the Port Harcourt and Warri refineries.

Among the optimists is the legion of contractors, creditors and sundry suppliers who are owed over N8.3 trillion by the embattled refineries. So old and debilitating have some of these debts been that several creditors who have seen better days, have been squeezed into penury while some others have also passed away, leaving huge burdens for the banks and other creditors who provided facilities for them.

 Others who share this new hope are Nigerians who still think that these national assets have more than a scrap value and would serve the country more creditably if properly repositioned. For these, there is a counter narrative that even if the refineries are restored, their utility may not be strategic given the transformation of the petroleum market with the advent of the Dangote Refinery, along with the cluster of moderate sized modular refineries across the country.

It needs to be recalled that this MoU between NNPCL and the Chinese companies is coming at the heels of a largely failed restoration initiative by the federal government in respect of the moribund refineries, in which it sank as much as a whopping sum of $1.5 billion in 2021 for the Port Harcourt refinery and $897 million for the Warri facility around the same period. It would seem that all that the exercise earned was a failure and widespread regime of mixed feelings of nostalgia over the future of these national assets.

 Meanwhile, the challenges facing the refineries go beyond their failures to perform but include an accumulated debt stock of N5 trillion, owed the complement of contractors with other creditors. Hence when the country may be juggling the fate of the refineries in endless debates of whether to sell or scrap them, there are Nigerians and others who are owed this humongous debt stock, and who need their money back. To them, the endless debates constitute nothing better than unwanted distractions.

Also among the scares of the creditors is the strong story making the rounds that due to the failure of the contractors and sub contractors handling the revival of the facilities to complete their tasks on schedule, funding for them may have been suspended, leading to more distress for the local creditors and contractors. The resort of the NNPCL to engage fresh contractors testifies to the failure of the current contractors.

With the new MoUs, the need exists for the NNPCL to fast track remediation measures with, and by the Chinese companies. In the circumstances, the NNPCL needs to appreciate the skeptic disposition of Nigerians towards spending further public funds on these facilities and be guided by the public take on any plan it has for them.

 Among the reasons for public misgivings on investing further on these refineries is the emergence of new facilities like Dangote and other refineries that not only meet domestic demand but also produce for export. 

Nigerians, therefore, do not expect the efforts of the Chinese companies to simply replicate the enterprise of Dangote and other existing refineries; rather, the intervention of the Chinese companies should be directed towards a reinvention of the country’s energy sector as pertains to the refinery subsector, and is sustainable in the context of contemporary global realities.

 From its performance, the Dangote Refinery has demonstrated the business side of petroleum refinery operations as a cash-cow, which the government needs to appreciate and develop a suitable business model for. A model of refining petrol ‘for cash’ rather than ‘for politics’ within the context of viable business practices, is what Nigerians are looking up to from the rehabilitated complement of state-owned refineries.    

 Beyond refining crude oil, there are a legion of other profitable operations of refineries, which can be exploited, courtesy of the intervention of the Chinese companies.

Secondly, the new dispensation demands a new model of symbiosis between the NNPCL facilities and their host communities. For instance, whereas the Port Harcourt Refinery was established in Eleme as far back as 1965, there is hardly any business operation in the host community that enjoys a downward link with the facility. This is so even with the advent of the Petroleum Industry Act (PIA) since 2021.

Finally, the circumstances of these state-owned refineries pose at least two challenges for the Ojulari-led NNPCL leadership. First is to prove that, against the din of public misgivings over the fate of the refineries, they can be successfully rehabilitated and recovered. The second challenge is that the resort to foreign contractors to rehabilitate these refineries whenever the need arises should, and can stop with the intervention of the Chinese this time, with future needs for servicing the facilities reserved for capable Nigerians.   

 

Repeat: First published May 16, 2026