By Femi Macaulay
News of the corruption-related investigation of three recently sacked managing directors of Nigeria’s government-owned oil refineries gave an insight into why the facilities remain problematic. The Economic and Financial Crimes Commission (EFCC) was reported to have arrested the former managing directors and some senior officials of the Port Harcourt Refining Company, Warri Refining and Petrochemical Company, and Kaduna Refining and Petrochemical Company. They allegedly mismanaged funds for the rehabilitation of the facilities, amounting to almost three billion US dollars.
The EFCC was reported to be probing the disbursement of $1,559,239,084.36 to the Port Harcourt refinery, $740,669,600 to the Kaduna refinery, and $656,963,938 to the Warri refinery. The commission said it was “a case of abuse of office and misappropriation of funds.”
Following the removal of fuel subsidy by President Bola Tinubu when he assumed office in May 2023, making the inoperative government-owned local refineries operational was expected to lower the cost of fuel. The high cost of fuel resulting from the removal of fuel subsidy is among the major factors responsible for the cost-of-living crisis in the country. Economic analysts blame the grim situation mainly on naira depreciation, higher food and energy prices and logistical costs, among others.
The alleged mismanagement of funds meant for the rehabilitation of the state-owned refineries has grave implications for the amelioration of the cost-of-living crisis. If the cost of fuel does not reduce significantly, there is unlikely to be a significant softening of the crisis.
There was understandable excitement, especially in Nigerian government circles, following the announced revival of the Port Harcourt and Warri oil refineries, which had been inoperative for years.
In November 2024, the Nigerian National Petroleum Company Limited (NNPCL) declared that it had revived the 60,000 barrel-per-day (bpd) Port Harcourt refinery in the Niger Delta. In December 2024, the company said it had resumed some operations at its 125,000 bpd Warri refinery, also located in the Niger Delta, which was shut down in 2015.
The country’s oil problems had been partly blamed on the four inactive state-owned refineries with a combined capacity of 445,000 bpd, including the 110,000 bpd Kaduna plant in the north and another one in Port Harcourt with a capacity of 150,000 bpd.
However, the revived refineries failed to deliver the expected result. The Port Harcourt refinery has been operating below 40 percent of its capacity since its applauded refurbishment while the Warri refinery was shut down less than a month after it resumed operations due to safety issues.
For instance, regarding the non-production of petrol at the Warri refinery, months after the announced completion of its repair, the Delta State Chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Harry Okenini, was reported saying, “Since the inauguration of the rehabilitated Warri refinery on January 5, 2025, there has been no green light for IPMAN to lift petroleum products from the facility.
“For the past months, there has been no product for marketers here, and we cannot just stay idle, so we decided to source products from the private depots.
“These private depot owners, today they will increase the price; tomorrow they will increase it again. So, the whole thing has caused problems for the business.”
Evidently, the failure of the revived refineries is counter-productive: The oil marketers are faced with high-cost issues as a result of being forced to patronise private depots; and the public bears the brunt of the situation.
Notably, in January, the Socio-Economic Rights and Accountability Project (SERAP) put a dampener on the euphoria over the revived refineries, demanding that the then Group Chief Executive Officer (GCEO) of NNPCL, Mele Kyari, should “account for and explain the whereabouts of the alleged missing N825bn and $2.5bn meant for ‘refinery rehabilitation’ and other oil revenues, as documented in the 2021 annual report by the Auditor-General of the Federation.”
“The Auditor-General fears that the money may be missing,” the group stated. SERAP said the report was published on November 27, 2024. It is unclear why the 2021 annual report was published in 2024.
In a letter to Kyari, dated January 4, 2025, SERAP had raised these issues and urged him “to identify those suspected to be responsible for the disappeared oil money and hand them over to the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC).”
According to the group, the NNPCL “reportedly failed to account for over N82bn meant for ‘refinery rehabilitation and repairs.’ The ‘money was deducted from the sale of Crude Oil and Gas between 2020 and 2021.’
Founded in Nigeria in 2004, SERAP is a non-governmental and non-profit organisation that “aims to use human rights law to encourage the government and others to address developmental and human rights challenges such as corruption, poverty, inequality and discrimination.” The group observed that mismanagement of public funds “has undermined Nigeria’s economic development, trapped the majority of Nigerians in poverty, and deprived them of opportunities.” So, it was not only a case of public funds allegedly mismanaged by the NNPCL’s management; it was also about the consequences.
Kyari was the company’s boss in the period covered by the 2021 annual report by the Auditor-General of the Federation. So, he was expected to provide answers to the questions raised. He was appointed Group Managing Director of the former Nigerian National Petroleum Corporation (NNPC) in July 2019. Two years later, in 2021 the NNPC was restructured into a limited liability company. He was the first GCEO of NNPCL.
It remains to be seen if the ongoing probe of former top officials of the company will clarify the state of the government-owned refineries. The Federal Government has been accused of staging the revival of the refineries to deceive the public. Indeed, some observers argue that it was a waste of money trying to rehabilitate the refineries in the first place. The authorities need to address these negative views.
The ongoing corruption-related investigation should be comprehensive and thorough, leaving no room for untouchable suspects.
In April, President Tinubu reconstituted the NNPCL board and appointed Bashir Ojulari as its new GCEO. The reorganisation is expected to be the beginning of a new chapter at the company. The new leadership must ensure that the refineries work. This is critical to easing the country’s unrelenting cost-of-living crisis.
