FG advised against more spending on idle NNPC refineries

The Federal Government has been urged to refrain from allocating more public funds to the rehabilitation of idle refineries, with concerns that continued spending without a clear commercial case could exacerbate the country's financial losses. Energy expert Dan Kunle made this recommendation in an open letter to President Bola Tinubu, following the president's assurance that government-owned refineries would resume operation.

Tinubu had recently pledged at the Presidential Villa in Abuja that the Port Harcourt, Warri, and Kaduna refineries would "come back to work." However, Kunle questioned the rationale behind further investment in these refineries, emphasizing that the government should investigate the causes of previous rehabilitation failures and the extent of expenditures to date.

The refineries have a combined installed capacity of approximately 445,000 barrels per day, but they have been idle for years despite billions spent on turnarounds. In 2021 alone, the government approved $1.5 billion for the Port Harcourt refinery and $1.484 billion for the Warri and Kaduna refineries. Kunle cited a House of Representatives report that indicated the three refineries incurred about N4.8 trillion in operating costs between 2010 and 2020, with accumulated losses of N366.5 billion.

He also noted that N42.65 billion was spent on rehabilitation projects between 2013 and 2019, and that the NNPC's 2024 annual report stated that Project Yield, a seven-year financing arrangement for the Port Harcourt refinery, had drawn N1.4 trillion as of December 2024. Kunle argued that the issue went beyond routine maintenance and questioned whether the refineries were merely being repaired or if their functional lifespan had ended.

He raised concerns about the involvement of Chinese partners in the projects and whether they genuinely intended to operate the facilities. Kunle also highlighted the broader infrastructure challenges, including pipeline vandalism, integrity issues, and operational difficulties that hinder the refineries' sustainability. He urged President Tinubu to reconsider further rehabilitation spending and suggested transferring the refineries to the Bureau of Public Enterprises for potential private management.

Kunle proposed distinguishing between assets worth saving, selling, or repurposing, and those that should be allowed to fail. He urged the government to conduct an honest accounting of funds already committed and warned against justifying further expenditures based on past spending.