Modular refineries flop despite subsidy removal

Three years after President Bola Ahmed Tinubu removed the petrol subsidy, the much-anticipated modular refinery project has yet to materialize, according to Daily Trust. Only five of the 30 licensed modular refineries have been completed, and just three were operational during the latest data period from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

No new modular refinery has commenced operations in the past three years since the subsidy removal. This development has raised questions about the government's strategy for expanding domestic refining capacity and reducing the country's dependence on imported petroleum products.

President Tinubu's announcement of the subsidy removal in May 2023 was viewed as an economic reset, with funds previously allocated to petrol subsidies redirected to infrastructure, job creation, and other productive sectors. Investors were expected to find domestic refining more commercially attractive due to deregulation and the establishment of smaller refineries near crude-producing communities, particularly in the Niger Delta.

The federal government aimed to set up three modular refineries in each of the six oil-producing states in the Niger Delta.

Despite the initial optimism, the plan has not been realized. The Pan Niger Delta Forum had called for the activation of the Modular Refinery Development Fund proposed in 2018 to accelerate modular refinery establishment in the Niger Delta. However, three years after the subsidy removal, the plan remains unrealized. Recent data from NMDPRA shows that, between December 2025 and June 2026, only three modular refineries - Waltersmith, Edo Refinery, and Aradel - were operational.

These plants together supplied an average of 562,000 litres per day of automotive gas oil (diesel). The situation highlights the challenge of converting refinery licenses and completed plants into consistent production.