Enormous Funds Spent on Refineries Yield No Results - Selling Them May Be the Solution

Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has highlighted that an astounding sum of over N10 trillion has been poured into Nigeria's refineries by the National Assembly. 

However, these refineries continue to remain non-operational. Oyedele voiced this concern during the Platform Nigeria symposium held on October 2 in Lagos.

In his statement, Oyedele suggested that it might be more prudent to consider selling these underperforming refineries. He explained:

"People often assume that if our refineries were functioning, our problems would be solved. However, this couldn't be further from the truth. In fact, it might be in Nigeria's best interest to collectively agree that our refineries should not operate, but rather, we should divest them.

"The National Assembly has disclosed that we've expended over N10 trillion on maintaining our refineries, even though they've failed to produce anything. If we were to refine crude oil in our current state of inefficiency, the cost of one liter of petrol would surpass that of any other country. We'd essentially be swapping the subsidy at the pump for a subsidy to keep the refineries running."

N11.3 trillion: Maintaining the Status Quo

In August 2023, the National Assembly announced its intention to investigate the alleged N11.3 trillion spent by the Federal Government on turnaround maintenance for Nigeria's refineries between 2010 and 2020.

The Chairman of the House of Representatives Committee on Public Accounts expressed deep concern about the dismal condition of Nigeria's refineries, given the substantial funds allocated for their upkeep over the past decade. He stressed the need for accountability in expenditure.

Simultaneously, the Buhari administration initiated a refinery rehabilitation process for the Warri, Kaduna, and Port Harcourt refineries. This endeavor, still underway during the Tinubu administration, aims to have all the refineries operational between December 2023 and 2024, as announced by the current Minister of State for Petroleum Resources, Heineken Lokpobiri.

Supporting the Argument

As Oyedele pointed out, addressing inefficiencies requires serious contemplation of divesting the refineries unless Nigeria is prepared to confront these challenges head-on.

Oil and gas analyst Dan D. Kunle echoed this sentiment, emphasizing the government's struggles with inefficiency in the public sector. Kunle argued that for effective management and operation, the oil and gas sector should be entrusted to the private sector. He maintained that many of the sector's challenges stem from excessive government involvement.

Kunle underscored the private sector's superior efficiency compared to its public sector counterparts and advocated for privatizing the downstream sector to optimize efficiency.

Previously, Mr. Kunle lamented the inactivity and underutilization of vital components within the Warri refinery, such as the petrochemical plant and the black carbon plant. These facilities, designed to produce crucial raw materials for Nigeria's tire industry, have languished under government control for years.