How Nigeria’s Moribund Refineries Kill Hopes Of Cheap Petrol Despite Dangote Refinery’s Operations
Warri refinery has a capacity as 125,000 barrels per day, Kaduna refinery has a capacity of 110,000 barrels per day, while the two combined refinery has a combined capacity for 210,000 barrels per day.
Nigeria is Africa’s most populous country.
While the country is blessed with crude oil, it is grappling with moribund refineries, to produce refined petrol.
On different occasions, different governments have promised to revive the four refineries owned by the Nigerian government, although as of the time of this report, they have failed to do so.
Nigeria owns Warri Refinery, Kaduna refinery, and Port Harcourt refinery (one and two).
Warri refinery has a capacity as 125,000 barrels per day, Kaduna refinery has a capacity of 110,000 barrels per day, while the two combined refinery has a combined capacity for 210,000 barrels per day.
Despite this capacity, the country has failed to refine its own petrol internally, relying on importation instead.
While Nigeria has continued to pump billions into rehabilitation of the refineries, there has been no result in terms of actual production.
SaharaReporters earlier reported that Nigeria spent over N200 billion on refineries rehabilitation.
A report by the House of Representatives adhoc committee on state of refineries in the country states that Nigeria spent N11 trillion on rehabilitation of refineries from 2010 to 2023.
In December 2016, the Nigeria National Petroleum Company Limited (NNPCL) promised to ensure that the country’s refinery worked to full capacity by 2017, this failed.
In 2018, the government shifted the deadline to 2020. All the deadlines have failed.
In March 2021, Nigeria approved a contract for rehabilitation of Port Harcourt refinery estimated at $1.5 billion, however , a recent request for completion date for the refinery made by Femi Falana was not acceded to.
Another contract was awarded in August 2021 for rehabilitation of Warri and Kaduna refinery, these also has not materialised as of the time of this report.
Till date, the Nigerian government has failed to truly revive the refineries, instead the refineries have continued to amass losses with heavy fundings with no refined petroleum to show.
There have also been allegations of corruption in the management of these funds.
However, when the Dangote refinery was to commence operations, it was widely reported as the ‘saviour’ of Nigerians from importation of petrol and touted as having the capacity of ensuring Nigerians get cheaper petrol.
Recent controversies around pricing have however meant that the assertion holds no water.
According to the different petrol marketing bodies, Dangote refined petrol is costlier than imported petrol and thus they would be reverting back to importing petroleum into the country.
Dangote refinery has fired back arguing that any petrol product cheaper than the refinery’s is substandard.
With Dangote refinery said not to be offering a succor, it would mean that Nigeria is back to the importation of petrol.
However, with many failed promises, the hope of cheaper petroleum from Dangote refinery dims especially as a litre of petroleum sells for over N1000 per litre, and now, the possibility of cheaper petroleum, experts say, continues to hang in the balance.
Henry Adigun, an oil and gas expert however noted that refining petrol locally does not mean that petroleum will be cheaper.
He noted that the exchange rate is a key determinant of the price of petroleum.
According to him, Dangote refinery does not mean petrol will be cheaper
“Dangote refinery does not mean that petrol will be cheaper, there are different determinants of what causes price of petroleum and exchange rate is one of it.”
He argued that local refineries only ensure energy security and if exchange rate and other factors continue the way they have been, the price of petrol may not be cheaper.
As of the time of this report, dollar exchanges at over N1600 which experts say will continue to drag the price of petrol higher.
Already, Nigeria is a country heavily reliant on petrol, especially in the face of poor electricity across the country.
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