The Federal Government has been urged to sell the government-owned Port Harcourt, Warri, and Kaduna refineries to raise funds for the construction of modular refineries.
These three refineries are currently managed by the Nigerian National Petroleum Company Limited (NNPC), the Federal Government’s oil firm.
The call for their sale was made by the Crude Oil Refiners Association of Nigeria (CORAN), which argued that this step is necessary to address the persistent fuel shortages in the country.
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Over the past month, Nigerians have faced long fuel queues at filling stations, with the pump price rising to as high as N1,000 per litre in some areas. Despite assurances from the NNPC, the queues have not disappeared, leading to increased transportation costs.
CORAN’s Publicity Secretary, Eche Idoko, expressed concern over the Federal Government’s expenditure of over $1 billion on rehabilitating the Port Harcourt refinery, which has yet to commence production despite six postponements. He asserted that the only way to end the fuel queues is for Nigeria to start refining its crude oil domestically.
Idoko suggested that modular refineries should receive intervention funds, which would also give the government a stake in these refineries. He explained that the root cause of the fuel crisis in Nigeria is the country’s insufficient supply of refined products, with the cost of importing fuel in foreign currency placing a significant burden on the government, particularly when subsidy payments are involved.
“We are not asking for free money. The government should set up an intervention fund in which people can access credit. So, it’s not free money. There are a lot of intervention funds in the agricultural sector,” Idoko said.
He further stated, “The $1.5 billion spent on the Port Harcourt refinery could have been used to develop 10 modular refineries, each capable of producing 10,000 barrels per day of PMS (Premium Motor Spirit). That would total about 100,000 barrels per day. With the addition of the Dangote refinery, this would solve the problem. We would actually have enough to begin exporting.”
Idoko emphasized that no one else could import PMS due to government subsidies and the lack of foreign exchange.
As a solution to the recurring fuel shortages, he suggested, “The low-hanging fruit is simply to empower the modular refineries. A modular refinery takes an average of 12 to 18 months to set up. This administration can identify and support the modular refineries that are already in progress.”
He noted that there are currently about 15 modular refineries in Nigeria—five are operational but not producing PMS, and the other 10 are at various stages of completion. Idoko argued that if the government supported these 15 modular refineries to produce PMS, the fuel scarcity problem could be resolved within 12 months, rather than continuing to invest in the Port Harcourt, Warri, and Kaduna refineries.
He recalled that a previous administration had attempted to sell these refineries, describing them as obsolete due to outdated technology. He suggested that the government should sell off these refineries, acknowledging that while the fuel crisis is a serious issue, there is no immediate solution other than continuing with imports, which is not sustainable.
Idoko proposed that the government should set a timeline for ending the importation of petroleum products and bring together stakeholders, including modular refineries and traders, to devise a plan.
He concluded by noting that in countries where there is self-sufficiency in refining, the private sector typically leads the industry. He cited Saudi Aramco, a privately-owned entity, as an example. In such countries, the government’s role is to create an enabling environment and provide support.
The NNPC revealed that it spent over N9.3 trillion on petrol imports in 2023. After months of denying subsidy payments, the company confirmed on Monday that it imports petrol and sells it at 50% below the landing cost, with the government covering the shortfall.
Many have argued that this is why the NNPC is struggling to import sufficient petrol to meet the country’s need.
