Nigeria: State prepares to sell its shares in four oil refineries

The Nigerian government has announced plans to fully privatize the country’s four state-owned refineries , a strategic move aimed at revitalizing an oil sector marred by decades of underperformance. The announcement was made by Sunday Dare , special adviser to President Bola Tinubu, on November 26.

A turning point for Nigerian oil refining

Nigeria, despite being among the leading producers of crude oil in Africa, has historically relied on imports of refined products to meet its domestic demand. This situation is expected to change soon with:

• The Dangote refinery , one of the largest in the world, begins production .
• The rehabilitation and gradual resumption of public refineries , starting with one of the Port Harcourt facilities.

Sunday Dare said:

“The full privatization of the Port Harcourt, Warri and Kaduna refineries is underway. Refining and production of petroleum products will reach a steady peak with the Dangote Refinery and the Modular Refineries in operation.”

The objectives of privatization

The modernization and privatization of refineries aims to:

1. End recurring fuel shortages.
2. Reduce dependence on imports , which weighs on public finances and depletes foreign currency reserves.
3. Optimizing local refining to meet national demand .

Sunday Dare expressed confidence about the impact of this initiative:

“With the gradual achievement of full local refining capacity, the days of queuing for fuel will come to an end.”

A sector in full transformation

The state-owned refineries concerned, two in Port Harcourt, one in Warri and one in Kaduna, have a combined capacity of 445,000 barrels per day (bpd) . However, they have been largely inoperative for more than 40 years , increasing the country’s dependence on imported petroleum products.

In 2020, these facilities were closed for renovation, with $1.5 billion in funding from the African Export-Import Bank (Afreximbank). Last Tuesday, the NNPC (national oil company) resumed operations at one of the Port Harcourt refineries, marking a first step towards increased local production.

Outlook for the Nigerian Oil Sector

The combined efforts of privatization, refinery modernization, and the ramp-up of the Dangote mega-refinery could redefine Nigeria’s energy landscape, reducing imports and boosting local production. However, the success of this transition will depend on the effectiveness of reforms and the ability to attract investors to operate the upgraded infrastructure.