Political economy of failure: Nigeria’s refining debacle exposed

Recent statements by Bayo Ojulari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, confirmed what most Nigerians have long known or suspected about the former corporation, now a company. His admission of political pressures shaping state-run refineries is revolutionary in its candor. Nigeria needs more such honest acknowledgments of corporate wrongdoing from public office holders whose establishments have contributed to the economy’s stunted performance.

Ojulari’s comments explain more than the debacle that rendered Africa’s leading oil producer an importer of refined products. They reveal the crippling impact of a defective political economy that caters to the few. The political pressure he described ensured that scarce resources were committed to refineries even when the decision-makers knew the plants were effectively dead. The obligation to keep refineries running, regardless of technical condition or commercial viability, eroded adherence to standard operational, maintenance, and shutdown protocols.

When economics clashes with politics, the conflict must be resolved in favour of the former. Economics serves the masses, the real people in society. Politics serves the class that benefits from the disruptions their actions create. Resolving this conflict—not only in the oil sector but across all sectors—must be the government’s focus now.

The success of political pressure on public institutions signifies the death or weakness of corporate governance within such enterprises. Ojulari’s comments must, therefore, resonate beyond NNPCL. They symbolise how easily management abdicates its responsibility to drive enterprises toward optimal public good in delivering services. This revelation of political interference must now be properly contextualised when assessing organisations against their expected outputs.

In NNPC’s case, both as a state-run enterprise and now as a private-sector organisation, its purpose regarding crude oil refining has been to produce refined products and make them available to Nigerian consumers. This explains the government’s decision to build refineries, raising their combined capacity to 445,000 barrels per day. These refineries, like their counterparts worldwide, were designed to operate on technical parameters, not political will. Yet in Nigeria, persistent political pressure to keep plants operating, irrespective of technical readiness or commercial viability, became the norm.

Nigerians paid dearly for this until the advent of Dangote Refinery. The country experienced chronic refinery underperformance. By sidelining maintenance cycles and operational discipline, political interference turned complex industrial assets into cost centres, undermining efficiency, safety, and the very objectives policymakers claimed to pursue. This created endless turnaround maintenance cycles, periods when nearly all four refineries would simultaneously undergo TAMs that never concluded.

This turned Africa’s leading oil producer into a perpetual importer of refined products. But while the failure to refine locally was often blamed on the local plants’ failures to produce, the interests behind the political pressure were smiling, hidden underneath the subterranean.

This tension between political imperatives and industrial logic has had far-reaching consequences for efficiency, costs, and long-term asset integrity, highlighting the governance challenges facing refinery management in Nigeria’s politically exposed environment.

Globally competitive refineries typically operate at 85–95 per cent capacity, with strict maintenance cycles and clear shutdown thresholds. By contrast, Nigeria’s state-owned plants have historically operated far below those benchmarks. Nigerians still remember that at least one of the plants remained shut for a long time, but there was no sign that the workers stopped receiving salaries. This was despite billions of dollars in spending. The consequences have been chronic fuel imports, higher fiscal costs, and accelerated asset deterioration. All these raised the stakes as Nigeria seeks to reposition refining as a commercial business rather than a political symbol.

Nigeria’s refining sector falls short of global operational standards in utilisation, asset reliability, and self-sufficiency. Although the privately run Dangote Refinery elevates Nigeria’s profile with a world-scale facility, most domestic assets lag global norms—largely due to historical underinvestment, inconsistent crude supply, and operational governance challenges. This explains why political pressures and policy decisions, rather than purely technical or commercial criteria, have been decisive in shaping refinery operations.

If political interference is eliminated and operational decisions are guided strictly by technical and commercial criteria, Nigeria’s refineries could finally approach global benchmarks. Capacity utilisation could rise to between 80–90 per cent, maintenance cycles could be optimised, and shutdowns could be scheduled for efficiency rather than optics. Domestic fuel production would increase, import dependence would fall, and fiscal pressures linked to subsidising loss-making plants could ease.

Beyond economics, insulating operations from political timelines would allow management to plan strategically, adopt best-in-class technologies, and attract private capital—potentially transforming state-owned refineries from persistent liabilities into profitable, competitive assets within five to ten years.

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