Bashir Ojulari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), has disclosed that the company has abandoned its previous practice of funding refinery repairs with crude oil, citing financial leakage as the primary reason. The revelation came during a media briefing in Abuja on Tuesday, where Ojulari outlined the rationale behind the new payment model and its implications for Nigeria’s energy sector.
The CEO emphasized that the prior approach—where NNPC paid contractors and financiers using crude oil—failed to yield net positive outcomes. “We paid for contractors, we paid for financing, we structured and paid for everything we paid for, right? And then none of those parties that were working with us had a stake in the performance of the refinery after their work,” Ojulari stated. This model, he argued, created a lack of accountability among partners, who did not share in the refineries’ long-term success or failure.
Ojulari highlighted that the shift in strategy was driven by lessons from past refinery rehabilitations. “What we have learned from the past rehabilitations of the refineries were multiple, but I’ll remind you again of the two of them that I’ve always talked about. One was that the model we have used before meant that we would incentivize people who work on the refinery, and there was no skin in the game,” he explained. The CEO noted that the previous system allowed partners to profit without bearing the risks of operational performance, leading to inefficiencies and financial losses.
The new model, Ojulari said, aims to align incentives with the commercial viability of the refineries. “Future partnerships will require aligned incentives tied directly to the commercial viability of refineries. We will no longer commit without a guaranteed route to bottom-line performance,” he added. This approach, he argued, would ensure that partners have a vested interest in the refineries’ success, fostering accountability and long-term value creation.
The CEO also addressed concerns about potential buyers seeking to dismantle the refineries as scrap. “There are those who are prepared to buy these refineries as scrap, right? And they already prepared their plans, right? So, we need to watch out,” Ojulari warned. He stressed the importance of securing partners who could transform the refineries into self-sustaining assets rather than liquidating them for short-term gains.
Ojulari detailed the rigorous selection process for potential partners, which initially included over 50 companies before narrowing to about 20. “Before we got to them, we started with over 50 possibilities, narrowed to about 20. It took us about nine months to come into that position,” he said. Among the finalists, Chinese companies stood out for their alignment with NNPC’s vision of building self-sustaining refineries. “They’re the only ones that aligned with our strategy and our vision, which is to build something that is self-sustaining and be ready to put in their own stake inside, not to just get a contract while we’re paying them,” Ojulari noted.
The Chinese partners, according to Ojulari, deployed over 33 senior engineers to collaborate with NNPC’s technical teams for more than three months without charging the national oil company. This effort, he said, demonstrated their commitment to the project. “What we discovered during our visit is that these guys were running at 120 per cent of design capacity,” Ojulari added, referring to petrochemical facilities observed in China. “That means you’ve designed something, you have now optimised the bottleneck and included other things to make it perform more than its nameplate capacity,” he explained.
Ojulari emphasized that NNPC seeks to modernize its refineries rather than merely restore them to outdated configurations. “We’re very cautiously optimistic that some of those best practices we saw with our eyes, not read in the books, that we can replicate them when we put these refineries back,” he said. The CEO stressed the need for the refineries to compete with modern facilities, stating, “We have to be at a standard where we can compete effectively in terms of quality or beat existing refinery standards.”
Despite the progress, Ojulari clarified that no final agreement had been signed with the Chinese partners. “We have not signed a final agreement yet. We believe that once they’ve finished the report of their study, they will then come back to us with a proposal,” he said. The CEO noted that commercial and technical negotiations would follow, with the possibility of a partnership contingent on mutual convergence. “If we converge, then we can say they have made a decision,” he added.
The CEO also mentioned that interest in the Port Harcourt and Warri refineries was strong, while work on the Kaduna refinery had yet to commence under the new model. “On the planned listing of NNPC Limited, Ojulari said the company had yet to set a date for its Initial Public Offering, stressing that the immediate focus was to make the national oil company ready for the market. “Our journey to be listed is about the whole company. The refinery is just one. But just also bear in mind that we cannot just determine a date for IPO on our own,” he said. “Ours is to be ready. That’s what’s so different and very important.”
Ojulari reiterated that while no IPO date had been set, the company was working to ensure readiness for the market. “We don’t have a date, but we are working hard to make sure we are ready as soon as we can. That’s what we are doing. And once we are able to get the date advised, we’ll definitely be able to share that,” he said. The CEO’s comments underscored the complexity of preparing a state-owned enterprise for public ownership, requiring structural and operational readiness.
The shift in payment strategy and the focus on strategic partnerships reflect broader efforts to revitalize Nigeria’s energy sector. Analysts note that the reforms could address long-standing inefficiencies in the country’s refining capacity, which has struggled to meet domestic demand. “By aligning incentives and leveraging international expertise, NNPC aims to transform its refineries into competitive assets,” said a senior energy analyst, who spoke on condition of anonymity.
The article also highlighted the challenges facing Nigeria’s gas sector, including capital and infrastructure bottlenecks. Despite efforts to boost local manufacturing through partnerships with Chinese equipment makers, progress has been slow. “The gas promise runs into capital, infrastructure bottlenecks,” the original source noted, underscoring the systemic hurdles facing Nigeria’s energy transition.
Ojulari’s remarks come amid broader discussions about Nigeria’s economic priorities. The government has sought private capital to bridge gaps in gas infrastructure, with mixed results. “FG seeks private capital to bridge Nigeria’s gas infrastructure gap,” the original article stated, reflecting the ongoing struggle to attract investment in critical sectors.
The journalist, Cynthia Egboboh, has covered Nigerian economic and energy issues for over eight years. Based in Abuja, her work focuses on the oil and gas industry, power, and infrastructure. Egboboh holds a Higher National Diploma in Business Administration and Management from Auchi Polytechnic, Edo State.
The reforms at NNPC and the broader energy sector highlight the challenges of modernizing Nigeria’s industrial base. With the refineries at a crossroads, the success of these initiatives will depend on sustained commitment, strategic partnerships, and effective governance. As Ojulari emphasized, the goal is not just to restore the refineries but to ensure they operate at global standards, contributing to national economic growth.
The ongoing negotiations with Chinese partners and the push for an IPO signal a pivotal moment for NNPC. While the path forward remains uncertain, the company’s focus on accountability, innovation, and long-term viability offers a blueprint for addressing Nigeria’s energy challenges. As Ojulari concluded, “We have to be looking forward, not just today,” a sentiment that encapsulates the urgency and ambition driving these reforms.
The public-interest implications of these changes are significant. A revitalized refining sector could reduce Nigeria’s reliance on imported petroleum products, stabilize fuel prices, and create jobs. However, the success of these efforts hinges on transparency, effective implementation, and the ability to attract and retain credible partners. As the NNPC moves forward, the eyes of the nation will be on its ability to deliver on its promises.
The article underscores the complexity of Nigeria’s energy landscape, where historical inefficiencies, political challenges, and global market dynamics intersect. With the right strategies and partnerships, the country has the potential to transform its refining sector into a cornerstone of economic development. For now, the focus remains on ensuring that the refineries are not just repaired but reimagined for the future.