President Bola Tinubu's stance on the viability of Nigeria's state-owned refineries is a topic of intense debate, with former President Olusegun Obasanjo expressing doubts about their future success. In a recent development, Tinubu has taken a bold position, declaring that the Port Harcourt, Warri, and Kaduna refineries will return to operation, despite the challenges they've faced over the years.
This declaration comes as a surprise, given the billions spent on turnaround maintenance without significant results. Tinubu's commitment to the refineries' revival is a stark contrast to Obasanjo's long-standing argument that the Nigerian National Petroleum Company Limited (NNPC) cannot successfully operate these facilities. Obasanjo's skepticism is rooted in his experience as President, where he attempted to transfer management and ownership to private investors, but faced rejection from companies like Shell.
The former President's concerns are not unfounded. The small size of the refineries, poor maintenance, and corruption have been identified as significant issues. Additionally, the high cost of rehabilitation, estimated at around $16 billion, raises questions about the efficiency of the investment. This expenditure is in stark contrast to the $4 billion spent by Aliko Dangote on Africa's largest refinery, highlighting the potential for better value in privatization.
Despite these challenges, Tinubu's determination to fix the refineries is evident. He emphasizes the need for profitability and value creation, stating that the facilities must yield a return on investment. This approach is a departure from previous administrations, which have struggled to revive the refineries despite repeated assurances.
However, not everyone shares Tinubu's optimism. Energy expert Dan Kunle criticizes the continued rehabilitation efforts, suggesting that privatization and redirecting public funds to other sectors would be more beneficial. Kunle argues that the information presented to Tinubu may be biased, driven by the self-interest of the refinery managers. He challenges the government to demonstrate the refineries' viability through a side-by-side comparison with a new facility, highlighting the potential for continued losses.
Despite the skepticism, some stakeholders, like the Port Harcourt Refinery Host Community Bulk Petroleum Retailers Association, support Tinubu's efforts. They pledge to double Tinubu's votes in Rivers State if the refinery becomes fully operational before the next general election, recognizing the potential for job creation, economic stimulation, and improved energy security in the region.
