By Zayyad I. Muhammad
The 60,000 barrel-per-day Port Harcourt refinery has officially resumed operations after years of inactivity. This marks a significant milestone in Nigeria’s efforts to revitalise its oil and gas sector. As one of the country’s oldest refineries, with a history spanning 59 years, the Port Harcourt facility is now expected to load at least 200 trucks of petroleum products daily, easing supply constraints, reducing dependence on imported fuels, and introducing a new price regime to compete with the 650,000 barrels per day Dangote refinery.
Nigeria’s four state-owned refineries have long been entangled in corruption, mismanagement, and relentless pipeline attacks by organised oil thieves. These issues have not only crippled their operational capacity but also forced the country to rely heavily on imported petroleum products, despite its status as a major oil producer.
As the old Port Harcourt refinery has resumed processing crude, with Warri and Kaduna expected to follow soon, an important question arises: Should Nigeria continue with the traditional model of absolute state control and management of its refineries? This outdated approach has proven ineffective, plagued by inefficiencies, corruption, and underperformance.
This presents both a challenge and an opportunity for President Bola Ahmed Tinubu to revamp Nigeria’s refinery management system and introduce reforms to ensure long-term production and efficiency.
When all four state refineries are fully revived and operational, as anticipated, President Tinubu’s government has three viable options for reforming the management of Nigeria’s four state-owned refineries. One approach could involve retaining ownership of one refinery while granting it full autonomy to manage its operations independently, cover its expenses, and remit dividends to the government.
Another option is to lease one of the refineries to an oil company or a group of investors interested in petroleum product refining, ensuring it operates efficiently under private-sector expertise. Lastly, the government could fully privatise one refinery, distributing shares among the federal government, host communities, and Nigeria’s 36 states. This inclusive approach would address diverse stakeholder interests while ensuring effective management.
However, discussions about Nigeria’s refineries are incomplete without addressing the critical issue of managing the country’s extensive 5,120-kilometre oil pipeline network and the Nigerian National Petroleum Corporation Limited (NNPC Ltd.). While the engagement of local communities by NNPC Ltd. has started yielding positive results, significant challenges persist.
The most pressing issues include frequent illegal tapping by oil thieves, sabotage, encroachments on pipeline rights-of-way, delays in detecting leaks, and equipment failures caused by the inaccessibility of certain locations. Compounding these problems is the reliance on outdated methods of pipeline management, which hinder the system’s efficiency and responsiveness.
To address these challenges, adopting advanced technologies is essential. Systems like SCADA (Supervisory Control and Data Acquisition), Fibre Optic Cable (FOC) networks, and tools such as “go-devils,” scrapers, or smart pigs can revolutionise pipeline management. These technologies provide real-time monitoring and early warning systems, enabling swift responses to potential threats or damages, even in remote and inaccessible areas. By integrating these solutions, Nigeria can significantly enhance the security and functionality of its pipeline network, ensuring a more reliable and efficient oil and gas sector.
The revival of the Port Harcourt old refinery and the anticipated return to operation of the Warri and Kaduna refineries are commendable achievements. However, the Tinubu administration must critically evaluate and adopt a new, feasible, profitable, and masses-friendly approach to managing these refineries.
The traditional model of state absolute control has consistently failed, resulting in inefficiencies, corruption, and financial losses. It is time for a transformative strategy that ensures the refineries operate sustainably while delivering maximum benefits to the Nigerian people.
Zayyad I. Muhammad writes from Abuja, zaymohd@yahoo.com.