The Independent Petroleum Marketers Association of Nigeria (IPMAN) has announced that the Port Harcourt Refinery is on track to meet its August 2024 deadline for the production of petroleum products. This development is expected to significantly enhance the country’s fuel supply, with the refinery expected to deliver between 10 to 12 million liters of petrol daily to marketers.
In an interview with Channels TV on Thursday, IPMAN’s National Operations Controller, Zarma Mustapha, expressed optimism about the refinery’s ability to meet the deadline and its potential impact on the country’s energy supply.
He stated, “I am confident and optimistic that this August deadline is going to be a realistic deadline. It will come on stream and fully produce all the necessary components that the refinery is supposed to produce.”
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Mustapha explained that the Port Harcourt Refinery will operate independently, with minimal government interference, allowing it to sell petrol at prevailing market prices. This approach marks a departure from past practices, where government-owned refineries were heavily subsidized and operated under stringent state control.
He noted, “The refinery is going to perform independently and sell at whatever prevailing market price for them to recover their cost.”
This independence is crucial, given the $1.5 billion loan the refinery secured in 2021 for its maintenance. The loan, obtained from an African financial institution, is expected to be repaid from the refinery’s earnings.
“The $1.5 billion is a loan they took from one of these African financial institutions. They took the loan with the promise of paying back with whatever they recoup from the earnings of the refinery,” Mustapha added.
Impact on Petrol Prices
While the resumption of operations at the Port Harcourt Refinery is expected to boost fuel supply, Mustapha explained that any potential reduction in petrol prices would depend on the refinery’s operational costs and market conditions. Since the refinery will be purchasing crude oil at international prices, it will need to set prices that ensure it can cover both operational costs and loan repayments.
“It depends on how much they are willing to sell. How much did they get the crude? Because they’re buying the crude at an international price too. They have to pay back the loan they took also,” he said.
Nigerian Refineries Long Story
Nigeria, despite being a major oil producer, has struggled with refining its crude oil domestically. The country’s four state-owned refineries—located in Port Harcourt, Kaduna, and Warri—have been largely non-functional, forcing Nigeria to rely heavily on imported refined petroleum products. This reliance has had severe economic consequences, including a significant strain on foreign exchange reserves and high consumer fuel costs.
The Port Harcourt Refinery’s planned resumption of operations is part of a broader government effort to revitalize the nation’s refining capacity and reduce dependence on imports. The Nigerian National Petroleum Company (NNPC) Limited, under the leadership of Mele Kyari, has assured the public that the refinery will begin operations this August, with the remaining refineries in Kaduna and Warri expected to follow in the second half of 2025.
However, skepticism surrounds these projections, as previous deadlines for the resumption of refinery operations have not been met. This skepticism was recently echoed by the Nigerian Senate, which raised concerns about the effectiveness of the $1.5 billion approved in 2021 for the turnaround maintenance of the Port Harcourt Refinery.
During an interactive session with stakeholders, Senator Opeyemi Bamidele, Chairman of the Senate Ad Hoc Committee to Investigate Alleged Economic Sabotage in the Nigerian Petroleum Industry, criticized the lack of tangible results from the investment.
Bamidele, who also serves as the Senate Leader, stated, “It is unfair and improper to neglect public companies while private businesses continued to flourish and thrive.”
The concerns raised by the Senate echo public sentiment toward Nigeria’s refineries. While the Port Harcourt Refinery’s potential return to operations is a promising development, energy experts say the government and NNPC will need to demonstrate tangible results to restore confidence in their ability to manage and revitalize the country’s refining capacity.