A candid re-evaluation of Nigeria’s refinery strategy has once again drawn attention to the long-troubled Port Harcourt Refinery, following blunt remarks by the Group Chief Executive Officer of NNPC Limited, Engr. Bayo Ojulari, who described the reopening of the Port Harcourt Refinery and Petrochemical Company as a monumental waste of national resources.
Speaking on Wednesday at the ongoing 2026 Nigerian International Energy Summit, Ojulari said Nigeria currently lacks the institutional and technical capacity to operate government-owned refineries profitably. He argued that without the right mix of financing, technical competence, and operational discipline, refinery operations inevitably become a drain on public funds.
According to him, effective refinery operations require three non-negotiable elements: strong financing to sustain operations, competent Engineering, Procurement and Construction (EPC) contractors, and world-class operational and maintenance capacity. He said a review of the Port Harcourt Refinery revealed that NNPC does not yet meet these conditions.
The Port Harcourt refinery was rehabilitated at a cost of about $1.5 billion under the leadership of former NNPC Group Managing Director, Mele Kyari. After nearly three years of rehabilitation work, the facility was reopened in November 2024 amid high public expectations. However, operations were suspended in May 2025 after the refinery recorded sustained financial losses.
Reports indicate that the shutdown had severe fiscal consequences. BrandIconImage reported that the closure of the Port Harcourt Refinery—the largest in the country—cost the Federal Government an estimated $249.7 million, equivalent to N366.21 billion, over a five-month period between May 24 and October 31, 2025, spanning 156 days.
The refinery, located along the Eleme axis of Rivers State, was revived in November 2024 and commenced operations shortly afterward. NNPC had stated at the time that the revamped facility had a production capacity of 60,000 barrels per day and was producing at least 1.4 million litres of Premium Motor Spirit (PMS) daily.
In addition, the corporation said the refinery was producing straight-run gasoline (naphtha) blended into 1.4 million litres of PMS per day; about 900,000 litres of kerosene; 1.5 million litres of Automotive Gas Oil (diesel); 2.1 million litres of Low Pour Fuel Oil (LPFO); as well as additional volumes of Liquefied Petroleum Gas (LPG), commonly known as cooking gas.
Despite these production figures, Ojulari said the refinery was operating at a significant loss, prompting his decision to shut it down shortly after assuming office. Ojulari was appointed GCEO of NNPC Limited by President Bola Tinubu in April 2025.
“The first thing that became clear was that we were running at a monumental loss to Nigeria. We were just wasting money. I can say that confidently now,” he said. “So the first decision I had to make was to stop the rot by shutting it down and then quickly recalibrating to see what could be done.”
He questioned how the refinery continued to incur losses despite steady crude supply.
“We were pumping cargo into the refinery every month, but utilisation was around 50 to 55 per cent. Those cargoes have value, and we were losing that value. We were spending a lot of money on operations and contractors, but when you look at the net outcome, we were just leaking value, and there was no clarity on how to turn those losses into positive returns,” he added.
Ojulari said NNPC is now seeking reliable partners with proven experience in refinery management to operate Nigeria’s refineries. He stressed that the company is no longer interested in conventional contractor arrangements.
“To make a refinery work, you need three things,” he said. “First, financing to support operations; second, a competent EPC contractor; third, world-class operational capacity to run the refinery.”
According to him, NNPC’s current strategy, as approved by its board, is to partner with experienced refinery operators rather than contractors or operations-and-maintenance service providers.
“We are not looking for contractors. We are not looking for O&M service providers. We are looking for an entity that actually runs refineries,” he said.
He further noted that the successful operation of the Dangote Petroleum Refinery has reduced the urgency to rush into reviving government-owned refineries.
“There was a lot of pressure about continuity, but we were not under that pressure. And thank God for Dangote Refinery. Thank God. Whether you love Dangote or hate him, thank God,” Ojulari said.
“Thank God he is a Nigerian and not someone from another continent. Despite everything, that gave us breathing space because we now have a refinery that is working.”
Oil Production Outlook
On crude oil production, Ojulari expressed optimism that Nigeria could achieve output of 1.8 million barrels per day in 2026. However, he described the Federal Government’s 2025 budget benchmark of 2.06 million barrels per day as overly ambitious.
He noted that Nigeria’s average oil production last year was about 1.7 million barrels per day.
“For this year, we have a target of two million barrels per day, but the budget is based on about 1.8 million barrels per day. So, we are not overcommitting,” he explained.
Ojulari said one of Nigeria’s key fiscal challenges in the previous year was excessive optimism in revenue projections.
“One of the financial problems Nigeria faced last year was over-projection. We over-projected production and revenue, and by mid-year, oil prices were lower while production was below projections. Yet spending plans had already been made based on those assumptions. That has far-reaching consequences,” he said.
He stressed that credible and realistic production planning is essential to avoid future fiscal crises.
N6 Trillion Saved From Reduced PMS Imports
Meanwhile, the Authority Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Saidu A. Mohammed, disclosed that Nigeria has saved an estimated N6 trillion due to reduced importation of petroleum products.
He said reforms in the midstream and downstream sector have rejuvenated the subsector, with the Dangote Petroleum Refinery playing a leading role. According to him, the refinery is now contributing 100 per cent of Nigeria’s domestic fuel consumption.
Mohammed attributed the savings to the Federal Government’s economic reforms, including full deregulation of the downstream sector, harmonisation of the foreign exchange market, increased use of gas, and the trading of crude oil and petroleum products in naira.
“The cumulative impact of the full deregulation of the downstream sector; the harmonization of the forex market; the incentivization and deepening the use of gas; and the trading of crude and product in naira has reduced the fiscal economic losses of importing petroleum products by over N6 trillion in the first nine months of 2025,” he said.
He congratulated President Bola Ahmed Tinubu and key ministers for what he described as enduring leadership legacies in the downstream energy sector, and expressed optimism about the strategic growth of Nigeria’s gas sector as a major regional energy provider.
Experts React to Refinery Pause
Commenting on the refinery shutdown, an Emeritus Professor of Petroleum Economics, Prof. Omowumi Iledare, said the pause in rehabilitation is being framed as a value test—whether the existing structure creates or destroys economic value.
From an analytical standpoint, he said, that approach is legitimate.
“Continuing rehabilitation without fixing the underlying commercial model would likely compound inefficiencies. His emphasis on JV partnerships, equity restructuring, and operational reconfiguration suggests a search for structural solutions rather than cosmetic fixes,” Iledare said.
He added that the current focus appears to be restoring commercial viability before reopening ownership debates, a sequencing he described as consistent with how distressed industrial assets are typically managed.
“What stands out most is the candor,” he said. “Public energy conversations rarely admit value destruction. By stating it plainly, the GCEO signaled a shift from managing perception to confronting economic reality.”
However, he warned that the key risk now is inertia.
“Structural reform must not become another indefinite holding pattern. Partnerships must be credible, governance transparent, and performance measurable. If execution matches intent, this moment could mark a turning point in how Nigeria manages strategic energy infrastructure—replacing sentimental asset management with disciplined value creation.”
However, former IPMAN General Secretary, Mike Osatuyi, was more critical, insisting that the refinery “never truly worked” despite the $1.5 billion spent on rehabilitation. He said authorities owe Nigerians a clear explanation of what went wrong, adding that “despite all the noise about the refinery, it never worked.”
As Nigeria reassesses the future of its state-owned refineries, the Port Harcourt experience appears to have become a cautionary tale—one that may redefine how the country manages strategic energy assets, shifting from sentiment-driven decisions to hard-nosed economic realities.