Key Points
- Wumi Iledare says refinery revival should be judged by commercial performance, not just production.
- He wants clear targets and timelines for Port Harcourt, Warri and Kaduna refineries.
- He says crude supply must be reliable and competitively priced.
- Iledare warns that poor planning could lead to another costly rehabilitation cycle.
Main Story
Petroleum economist Prof. Wumi Iledare has urged the Federal Government to ensure that the rehabilitation of the country’s state-owned refineries is backed by a commercially viable operating plan.
Iledare said returning the Port Harcourt, Warri and Kaduna refineries to production would have little value if the facilities continued to depend on government funding without generating sufficient returns.
He spoke with the News Agency of Nigeria (NAN) on Sunday in Lagos, following President Bola Tinubu’s recent assurance that the government was working to restore the refineries to sustainable operations.
Tinubu had said on Aug. 13 that the facilities were undergoing restructuring and technical assessments as part of efforts to make them productive and profitable.
Iledare said the government should set specific deadlines and measurable targets for the facilities rather than treating the resumption of production as the end goal.
He also called for public disclosure of key information, including the amount being invested, expected production levels and the milestones against which the rehabilitation programme would be assessed.
According to him, the refineries require professional management and sufficient funds for maintenance if they are to remain operational after rehabilitation.
He said their business structure should also give managers enough operational independence while ensuring that performance is regularly assessed.
Iledare identified crude availability and pricing as another major issue that would determine whether the refineries could remain commercially viable.
He said the government needed to establish predictable arrangements for supplying crude to the facilities and ensure that the cost of the feedstock did not undermine their ability to compete.
The petroleum economist said production figures alone would not provide an adequate assessment of the refineries.
He said factors such as operating expenses, the quantity and quality of refined products, capacity utilisation and profit margins should form part of the evaluation.
Iledare also stressed the need to determine whether the refineries could compete effectively with other sources of petroleum products once they resume operations.
He warned that failure to address these issues could leave the country repeating a familiar pattern in which refineries undergo rehabilitation, operate for a period, shut down and require further public funding.
The Issues
The government faces the challenge of ensuring that billions of naira committed to refinery rehabilitation translate into sustainable and commercially viable operations.
What’s Being Said
“Politics must not trump economics.” – Prof. Wumi Iledare, Professor Emeritus of Petroleum Economics and Policy Research, Louisiana State University.
“The real policy test is whether they can function efficiently, competitively, sustainably and profitably without becoming a recurring burden on the public purse.” – Prof. Wumi Iledare.
What’s Next
The government is expected to proceed with the restructuring and technical assessment of the state-owned refineries while establishing the framework for their future operations.
Bottom Line
Iledare said the success of the refinery programme should ultimately be measured by whether the facilities can operate efficiently, compete in the market and justify the capital invested in them, rather than simply by whether they resume production.
