President of Dangote Group, Alhaji Aliko Dangote, says he doubts Nigeria’s state-owned refineries will ever work again, despite gulping an estimated $18 billion in public funds.
Speaking on Thursday, July 10, during a visit by members of the Global CEO Africa from Lagos Business School to his refinery in Lekki, Lagos, Dangote questioned the viability of rehabilitating the Port Harcourt, Warri, and Kaduna refineries managed by the Nigerian National Petroleum Company Limited.
He recalled a 2007 deal under former President Olusegun Obasanjo’s administration in which his consortium bought the refineries, only to return them months later under President Umaru Musa Yar’adua. Dangote said the then-refinery chiefs told Yar’adua that the facilities had been sold below value.
“The refineries that we bought before, which were owned by Nigeria, were doing about 22 per cent of PMS. We bought the refineries in January 2007. Then we had to return them to the government because there was a change of government,” Dangote said.
“And the managing director at that time convinced Yar’adua that the refineries would work. They said they just gave them to us as a parting gift or so.
“And as of today, they have spent about $18bn on those refineries, and they are still not working. And I don’t think, and I doubt very much if they will work.”
Comparing the ongoing Turnaround Maintenance of the facilities to retrofitting a decades-old car, Dangote added:
“(The turnaround maintenance) is like you trying to modernise a car that was built 40 years ago, when technology and everything have changed. Even if you change the engine, the body will not be able to take the shock of that new technology engine.”
His comments reinforce those of former President Olusegun Obasanjo, who last year criticised the NNPC’s capacity to operate the refineries, noting that even international oil companies like Shell had refused to take on the responsibility.
Obasanjo said: “I ran to him (Yar’Adua), I said, ‘You know this is not right’. He said, ‘Well, NNPC said they can do it.’ I said, ‘NNPC cannot do it,’ I told my successor that ‘the refineries, from what I heard and know, will not work and when you want to sell them, you will not get anybody to buy them at $200m as scrap’. And that is the situation we are in.”
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He further alleged that NNPC officials prioritised corrupt gain over functional output.
“NNPC knew that they could not do it, but they knew they could eat and carry on with the corruption that was going on in NNPC.
“When people were there to do it, they put pressure. In a civilised society, those people should be in jail,” Obasanjo said.
In January, Obasanjo again criticised the rehabilitation efforts. “I was told not too long ago that since that time, more than $2bn have been squandered on the refineries and they still will not work,” he said.
Referencing Dangote’s own refinery success, Obasanjo noted: “If anybody tells you now that it (the refinery) is working, why are they now with Aliko (Dangote)? And Aliko will make his refinery work; not only make it work, he will make it deliver.”
He concluded with a Yoruba proverb: “They say that after he has harvested 100 heaps of yams, he will also have 100 heaps of lies. You know what that means.”
Recent events appear to support these views. The old Port Harcourt refinery was shut down again six months after being declared operational.
Warri refinery also ceased operations one month after it was reopened. The Manufacturers Association of Nigeria and other industry voices have urged the Federal Government to privatise or scrap the facilities, branding them economic liabilities.
In 2021 alone, $1.4bn was approved to rehabilitate the Port Harcourt refinery, $897m for Warri, and $586m for Kaduna.
In the same year, N100bn reportedly went into refinery rehabilitation at a monthly spend of N8.33bn.
Between 2013 and 2017, $396.33m was spent on Turnaround Maintenance. Yet, none of the refineries are functional.