Nigerias iconic Port-Harcourt Refinery, once a symbol of the nations industrial ambition, is facing intense scrutiny despite a $1.5 billion overhaul to revamp its operations and restore public confidence.
This skepticism is amplified by Nigerias history of failed attempts to revive its refineries. Between 2015 and 2019 alone, over $3 billion was reportedly spent on fixing the countrys four refineries such as Port Harcourt ($1.5bn); Warri ($897.6m) and Kaduna refinery ($586.9m) with little to show for it.
News broke in Africas biggest economy that the oil arm of the refinery, which can produce 60,000 barrels of products per day, had been successfully rehabilitated and that 200 trucks were loading products for distribution to various parts of the country.
This milestone came after decades of unfulfilled promises and several missed deadlines since initial rehabilitation efforts commenced in 1999.
The current phase, funded by a $1.5 billion loan from international partners, aims to address years of neglect that left the refinery dormant and dependent on crude imports to meet Nigerias fuel demands.
NNPCL had initially failed to make public the litres of petrol, diesel, jet fuel, and naphtha the refinery would roll out, in negation of global best practices. However, citing public criticism, the national oil company later said it was refining 1.4 million litres of petrol per day.
Despite these promises, the refinerys chequered past looms large. Critics argue that the hefty rehabilitation costs may outweigh the benefits. Questions persist about whether the investment can be recouped, given Nigerias precarious fiscal situation and the refinerys historical inefficiencies.
They point to the refinerys history of breakdowns and operational inefficiencies, suggesting throwing money at it might be akin to pouring water into a sieve.
For example, the Nigerian Extractive Industries Transparency Initiative (NEITI) previously reported that Nigerian refineries operated at an average capacity utilisation of just 8.55% over 21 months.
Industry sources say the prospect of Port-Harcourt Refinery running at its nameplate capacity is in doubt, as it would at best reach 40% to 50 percent of capacity.
According to a senior source in the oil and gas industry, The Nigerian National Petroleum (NNPC) Ltd did not do much construction of any sort in 30 years between 1990 and 2020, and a lot of organisational knowledge has certainly been lost in this period.
We can infer therefore, that the refinery revamp projects being spearheaded by NNPC are much bigger than the individuals leading them, particularly with little to no operational history to leverage – in planning and executing the projects – along with ingrained cultural inefficiencies to contend with, he stated.
