Mr. President, How Much Money And Time Do You Want To Spend On 4 Dead Refineries?

Your Excellency, President Bola Ahmed Tinubu, Good Afternoon. I write this open letter to respectfully inquire about the allocation of funds and resources towards the rehabilitation of four dead refineries in Nigeria. Following your recent statements on the matter, I believe it is important to examine the financial history, current state, and potential outcomes of these projects before committing additional billions of dollars.

Nigeria possesses a significant stock of industrial capital that has already been paid for, maintained, and rehabilitated. These refineries, combined, have a combined installed capacity of approximately 445,000 barrels per day. However, Nigeria has largely imported the majority of the petroleum products consumed domestically. This raises questions about the financial justification for further rehabilitation of these refineries.

In 2021, approximately $1.5 billion was approved for the rehabilitation of Port Harcourt, while another $1.484 billion was allocated for Warri and Kaduna refineries. This amounts to nearly $3 billion in major refinery rehabilitation approvals in a single year. The NNPC reported approximately N100 billion in refinery rehabilitation expenditure during 2021 alone. However, this is just a part of the story, as the refineries have incurred significant operating and running costs and accumulated losses over the years.

The House of Representatives recorded over N4.8 trillion in operating and running costs for the refineries between 2010 and 2020, with accumulated losses of approximately N366.5 billion. Additionally, there were about N42.65 billion allocated for rehabilitation projects between 2013 and 2019. A separate House motion in 2023 cited an even larger cumulative figure of N11.35 trillion allocated to refinery renovation from 2010 onward. A forensic accounting of these expenses is overdue before any further spending is considered.

The refineries in question are over 30 years old, with outdated technology that belongs to a different era. Modernizing these refineries with current technology and equipment would likely be more cost-effective than continuously repairing and rehabilitating them. The President should consider whether it is more commercially rational to invest in repairing these aging refineries or to explore new opportunities for industrial development.