In a bid to tackle the long-standing challenges faced by Nigeria’s oil refineries, the House of Representatives has issued a recommendation to the Nigerian National Petroleum Company Limited (NNPCL). The recommendation urges the NNPCL to explore the option of outsourcing the management of the country’s refineries following their rehabilitation.
A recent report has revealed that Nigeria has expended over $10 billion in the past decade on three oil refineries that have produced minimal amounts of fuel. Despite a combined capacity of 445,000 barrels of crude per day, the refineries have been operating at less than 30% capacity since 2010. This has necessitated heavy reliance on fuel imports, with artificially low prices sustained by fuel subsidies.
To address these challenges and stabilize fuel prices following the recent abolition of the decades-long subsidy regime, the NNPCL has undertaken the task of rehabilitating the refineries. Contracts worth over $2 billion have been awarded to Italy’s Maire Tecnimont SpA and South Korea’s Daewoo Engineering & Construction Co. Ltd. for the rehabilitation of the Port Harcourt and Warri complexes, respectively. The report confirms that both facilities are expected to resume operations by the end of 2023.
In light of the rehabilitation efforts, the House of Representatives report advises the NNPCL to consider partnering with reputable international firms for the management of the refurbished refineries. Outsourcing the management to experienced firms can potentially enhance operational efficiency and maximize the facilities’ productivity. This strategic move aims to optimize the utilization of resources and ensure the refineries operate at their full potential.
The recent commissioning of the colossal 650,000-barrels-per-day facility built by renowned entrepreneur Aliko Dangote has provided some hope for the country’s refining capabilities. However, it remains uncertain when the Dangote refinery will achieve significant fuel supply to meet the domestic market’s demands.
As Nigeria works towards revamping its refining sector, the outsourcing of management for the rehabilitated refineries stands as a crucial step in achieving sustainable progress. By tapping into the expertise of reputable international firms, Nigeria can potentially overcome the historical inefficiencies and challenges that have hindered its refining capacity for years. This move aligns with the government’s commitment to strengthening the domestic energy sector and ensuring a stable and self-sufficient fuel supply for the nation.