Why Nigeria Must Rethink Refinery Ownership to Unlock Sector Growth

By Olu Verheijen, Special Adviser to the President on Energy

Nigeria’s energy sector is undergoing a transformation—one that demands bold decisions, pragmatic leadership, and a willingness to challenge legacy systems that no longer serve our national interest. Among the most pressing issues is the future of our state-owned refineries. For decades, these facilities have consumed billions in public funds with little to show in terms of output, efficiency, or economic impact. Today, we are at a crossroads. The question is no longer whether reform is needed—it is how far we are willing to go to achieve it.

At the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), I shared the Federal Government’s evolving position: selling off our refineries is now a serious option. This is not a retreat from national development. It is a strategic pivot toward unlocking private capital, technical expertise, and competitive discipline that can revitalize our downstream oil sector.

Let’s be clear—Nigeria’s four state-owned refineries in Port Harcourt, Warri, and Kaduna have a combined installed capacity of 445,000 barrels per day. On paper, this should make us a refining powerhouse. In reality, these plants have remained largely dormant for decades. Despite repeated turnaround maintenance projects, the refineries have failed to deliver consistent output. The result is a downstream sector that relies heavily on imports, distorts market signals, and places undue pressure on our foreign exchange reserves.

The removal of fuel subsidies earlier this year was a watershed moment. It eliminated a major distortion that had long shielded inefficiency and discouraged private investment. With that barrier removed, we now have a unique opportunity to reimagine the role of refineries in our energy landscape. Selling these assets—if done transparently and strategically—can catalyze a wave of investment, innovation, and job creation.

We are not alone in this thinking. Around the world, governments are re-evaluating their role in energy markets. From Brazil to India, state-owned enterprises are being restructured, privatized, or partnered with private firms to improve performance. Nigeria must not lag behind. We must embrace models that prioritize efficiency, accountability, and value creation.

The Nigerian National Petroleum Company Limited (NNPCL) is already taking steps in this direction. Last week, it announced its search for technical equity partners to manage and operate the refineries at international standards. This is a welcome development. It signals a shift from state-led operations to performance-driven partnerships. It also aligns with our broader reform agenda under President Bola Tinubu, which seeks to restore market efficiency and transparency across the energy value chain.

But we must go further. The long-term vision is to position NNPCL as a commercially viable entity—one that can eventually list on public markets and attract global investors. An initial public offering (IPO) is not just a financial milestone; it is a governance milestone. It requires transparency, operational excellence, and a clear value proposition. Selling off non-performing assets like dormant refineries is a necessary step toward that goal.

Of course, any new entrants into the refining space will face competition. The Dangote Refinery, with its 650,000-barrel-per-day capacity, is already reshaping the downstream landscape. It produces more gasoline and diesel than Nigeria consumes domestically and has announced plans to double its capacity. This is a game-changer. It introduces scale, efficiency, and market discipline that can benefit consumers and the broader economy.

Rather than viewing Dangote as a threat, we should see it as a benchmark. It sets a standard for what is possible when private capital, technical expertise, and long-term vision come together. Our goal should be to create an ecosystem where multiple players—public and private—compete on merit, not on subsidies or political patronage.

Let me emphasize: reform is not about ideology. It is about outcomes. Our objective is to ensure that Nigeria’s energy sector delivers for its people. That means reliable supply, affordable prices, decent jobs, and sustainable growth. Selling the refineries is not a silver bullet, but it is a critical lever in achieving these outcomes.

We must also address the elephant in the room: trust. For years, Nigerians have watched as billions were spent on refinery rehabilitation with little to show. Promises were made, deadlines were missed, and expectations were dashed. If we are to pursue privatization, we must do so with transparency, accountability, and stakeholder engagement. The process must be open, competitive, and guided by clear criteria.

This is where governance reform becomes essential. We need robust regulatory frameworks that protect consumers, ensure environmental compliance, and promote fair competition. We must strengthen institutions like the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to oversee the transition and enforce standards. We must also engage civil society, labor unions, and host communities to build consensus and manage change.

The stakes are high. Nigeria’s energy sector is not just an economic engine—it is a social lifeline. Millions depend on it for transportation, cooking, and livelihoods. Any reform must be sensitive to these realities. That is why we are pursuing a phased approach—one that balances urgency with caution, ambition with pragmatism.

In the short term, we will continue to support NNPCL’s efforts to find credible technical partners. We will also explore models of partial privatization, joint ventures, and management contracts. In the medium term, we will assess the performance of these partnerships and make decisions based on data, not ideology. In the long term, we envision a diversified refining sector with multiple players, competitive pricing, and world-class standards.

We must also think regionally. Nigeria is the largest economy in West Africa and a key player in the African Continental Free Trade Area (AfCFTA). A vibrant refining sector can position us as a hub for petroleum products, serving markets from Ghana to Cameroon. It can also reduce our dependence on imports, stabilize our currency, and improve our trade balance.

But to get there, we must be willing to let go of legacy assets that no longer serve us. We must be willing to challenge vested interests and embrace change. We must be willing to bet on the future, not the past.

Let me end with a personal reflection. As someone who has worked across the energy value chain—from investment banking to policy advisory—I have seen what is possible when vision meets execution. Nigeria has the talent, the resources, and the strategic location to become a global energy leader. What we need now is the courage to act.

Selling the refineries is not a retreat. It is a reset. It is a chance to build something better, smarter, and more inclusive. It is a chance to write a new chapter in Nigeria’s energy story—one defined not by missed opportunities, but by bold decisions and lasting impact.