Former President Olusegun Obasanjo has shed light on Nigeria’s enduring refinery challenges, detailing unsuccessful attempts to privatize the country’s refineries and the financial mismanagement that followed under government control.
In an exclusive interview with Channels TV on Thursday, Obasanjo revisited his administration’s efforts to address the inefficiencies of the Port Harcourt, Warri, and Kaduna refineries. He described the obstacles he encountered while seeking external assistance to rehabilitate and operate these facilities.
“I asked Shell to come and run it for us, and Shell said they wouldn’t,” Obasanjo recounted. “I said, ‘Please come and take equity.’ They said no. I said, ‘Okay, don’t take equity; just come and manage it.’ They still said no.”
He revealed that Shell’s refusal was based on several factors. According to him, the head of Shell cited four key reasons:
- Profit Margins: Shell’s primary profits came from upstream operations, not downstream activities, which they only maintained to stay operational.
- Small Scale: Nigeria’s refineries—with capacities of 60,000, 100,000, and 120,000 barrels—were significantly smaller than the global average of 250,000 barrels at the time.
- Maintenance Issues: The facilities were poorly maintained, making them unattractive for external operators.
- Corruption: Rampant corruption in refinery operations deterred Shell from getting involved.
Dangote’s $750 Million Public-Private Partnership Offer
After Shell declined, Africa’s richest man, Aliko Dangote, stepped forward with a proposal. Obasanjo disclosed that Dangote assembled a team and invested $750 million to operate the refineries through a public-private partnership (PPP). However, this initiative was short-lived.
“Aliko got a team together and they paid $750m to participate in a PPP to manage the refineries,” Obasanjo said. “But my successor refunded their money. I went to my successor and explained the situation. He said the Nigerian National Petroleum Corporation (NNPC) claimed they could manage the refineries. I told him, ‘You know they cannot run it.’”
Obasanjo lamented the inefficiency of government-run operations and expressed confidence in Dangote’s ability to manage his privately owned refinery effectively. He contrasted this with the billions of dollars wasted under government management.
“Since then, more than two billion dollars have been squandered on the refineries, yet they still don’t work,” he said. “If a company like Shell tells me what they told me, I believe them. And if anyone claims the refineries are now operational, why are they relying on Aliko? Aliko will not only make his refinery work; he will make it deliver.”
A Yoruba Proverb on Inflated Claims
Obasanjo concluded with a Yoruba proverb to illustrate the discrepancy between claims and reality. “They say after harvesting 100 heaps of yam, a person may also harvest 100 heaps of lies. You know what that means,” he quipped, emphasizing the inflated claims surrounding the refineries’ performance.
Obasanjo’s revelations highlight the persistent challenges in Nigeria’s energy sector and the missed opportunities to resolve them through private sector partnerships.
