…MoU sparks calls for audit of $3.5bn rehabilitation funds
…Concerns mount over refineries revamp
By Charles Ebi
Fresh Controversies have continued trailing the recent Memorandum of Understanding ,MoUs, signed by the Nigerian National Petroleum Company Limited ,NNPC, with two Chinese firms Sanjiang Chemical Company Limited and Xingcheng (Fuzhou) Industrial Park Operation and Management Co. Ltd, for the rehabilitation and operation of the moribund Warri and Port Harcourt refineries, amid growing calls for the Federal Government to explore the competence of indigenous energy companies with proven operational track records across the oil and gas sector.
For decades, Nigeria’s state-owned refineries have stood as symbols of both national ambition and national failure; massive industrial assets that have consumed billions of dollars in rehabilitation funds, yet remain largely dormant while the country imports most of its fuel needs. Now, another attempt is underway.
The NNPC had announced that it signed the MoUs with Sanjiang Chemical Company Limited and Xinganchen (Fuzhou) Industrial Park Operation and Management Company Limited as part of plans for a technical equity partnership aimed at completing outstanding rehabilitation works and operating the two refineries which has again stirred cautious optimism across the oil and gas sector.
But unlike previous announcements, this latest move is arriving amid widespread public distrust, rising fuel costs, and growing questions over how successive governments spent billions of dollars on refinery rehabilitation projects that delivered little or no results.
At the heart of the debate is whether the new “technical equity partnership” model can finally succeed where previous turnaround maintenance programmes failed.
But the development has generated criticism within sections of the oil and gas industry, especially after former President of the Organised Private Sector of Nigeria ,OPSN, Dele Oye, questioned the technical and financial competence of the Chinese firms during an interview on Arise Television yesterday.
Oye argued that neither Sanjiang Chemical nor Xinganchen had verifiable global refinery rehabilitation or operational experience comparable to established Engineering, Procurement and Construction ,EPC, firms like Saipem and Tecnimont, which previously handled rehabilitation contracts for the Nigerian refineries.
Besides, industry analysts argued that Nigeria now has a stronger base of local upstream and midstream operators with growing technical and financial capabilities than it did a decade ago.
Many of local companies that took over assets divested by IOCs have not been found wanting, they have filled the gap with demonstrable competence.
Companies such as Conoil Producing, Seplat Energy, First E&P and Renaissance Africa Energy Holdings have emerged as major players in Nigeria’s oil and gas industry, controlling strategic upstream assets and executing complex production and infrastructure projects.
Oye, criticised the recent MoUs signed by the NNPC for the rehabilitation of the Warri and Port Harcourt refineries, alleging that the selected Chinese firms lack the financial and technical competence to execute such complex projects.
According to him investigations conducted by the Alliance for Economic Research and Ethics showed that the two companies linked to the refinery deals had no proven record in refinery rehabilitation or operation anywhere in the world.
According to Oye, one of the firms involved in the MoU, Sanjiang Chemical Company, is not an EPC company, but operates mainly in the downstream chemicals business.
Oye stated that although the company is publicly listed on the Hong Kong Stock Exchange, its recent financial fundamentals indicated declining cash reserves and increasing short-term borrowings.
“The first company, Sanjiang Chemicals, is not an EPC company. It’s not an engineering company.
Nigeria owns four refineries, two in Port Harcourt, one in Warri, and one in Kaduna, with a combined installed refining capacity of 445,000 barrels per day.
Yet, despite years of rehabilitation contracts and repeated government assurances, the facilities have remained completely idle for long periods.
Industry estimates indicate that more than $16 billion may have been spent on refinery rehabilitation efforts over the past decade alone, including the controversial $1.5 billion approved for the Port Harcourt refinery rehabilitation under the Muhammadu Buhari administration.
In 2021, the Federal Government approved a $1.5 billion EPC contract for the rehabilitation of the 210,000 bpd Port Harcourt Refinery. The contract was awarded to Italy’s Maire Tecnimont through its subsidiary, Tecnimont SpA, with the project structured in phases lasting between 18 and 44 months.
A few months later, in August 2021, the government approved another $1.48 billion for the rehabilitation of the Warri and Kaduna refineries.
Of the amount, about $897.7 million was earmarked for the 125,000 barrels-per-day Warri Refinery, while $586.9 million was approved for the 110,000 barrels-per-day Kaduna Refinery.
The contracts were awarded to Italy’s Saipem and Saipem Contracting Nigeria Limited, with the rehabilitation expected to be completed in three phases spanning 21, 23 and 33 months.
However, despite repeated announcements of mechanical completion and partial resumption of operations, the refineries have continued to face operational setbacks, shutdowns and production challenges.
In fact, today, not a single barrel of oil is being refined from the facilities.
In the same, vein, in late 2024, Nigerians were briefly told that the Port Harcourt refinery had resumed operations, sparking celebrations. But the optimism quickly faded as fuel supply realities failed to match official claims.
For many stakeholders, the latest Chinese-backed deal represents yet another test of government credibility.
Comrade Azubuike Azubuike, former zonal chairman of PENGASSAN in Port Harcourt, said Nigerians have become deeply skeptical because previous refinery revival announcements ended without measurable impact.
Unfortunately, Nigerians are no longer interested in stories. Nigerians want to see action rather than words”, he said.
According to him, repeated government pronouncements without visible results have weakened public confidence in the refinery rehabilitation process.
“There have been a lot of discussions, engagements, and pronouncements about similar agreements before now. We were told in 2024 that the refineries were working. Unfortunately, we are still where we are today”.
According to Azubuike, the core problem goes beyond technical failures and points directly to governance and corruption.
Huge amounts have been put into the refineries, yet we cannot see products coming out. It goes to show the monumental fraud and corruption embedded in the whole refinery project”.
“It is insane to put such money into a project without any result and then move on like nothing happened. People need to answer questions.
People need to bear the consequences of billions of dollars spent on rehabilitation of the refineries without any result”.
However, civil society organisations say reviving the refineries alone will not be enough unless transparency and environmental accountability are prioritize, warning that secrecy surrounding the MoU could undermine public trust.
“The full terms of the MoU must be made public. Nigerians deserve to know the cost structure, financing model, ownership arrangement, and projected timeline for refinery operations because secrecy breeds suspicion”, he said.
“Host communities in Eleme, Okrika, Warri South, and surrounding areas must be meaningfully engaged from planning to implementation”.
Meanwhile, a coalition of oil sector reform and Accountability advocates has called on the Nigerian National Petroleum Company Limited ,NNPC, to account for more than $3.5 billion reportedly spent on refinery rehabilitation projects before proceeding with fresh agreements involving Chinese firms.
They criticized what there described as a recurring cycle of waste, opacity, and failed promises surrounding Nigeria’s state-owned refineries.
The group said the latest agreement raises major accountability concerns, particularly given previous billions of dollars committed to refinery rehabilitation projects without corresponding operational results.
“We have gathered because Nigeria can no longer continue to tolerate in a dangerous cycle of waste, opacity, and endless promises in the management of the nation’s refineries”, he said.
“For decades, successive administrations have committed billions of dollars to refinery rehabilitation projects, yet the country continues to depend heavily on imported refined petroleum products.
Nigerians have repeatedly been told that the Port Harcourt, Warri, and Kaduna refineries were being revived, only for those promises to collapse under the weight of poor execution, secrecy, and lack of accountability”.
Despite significant public expenditure on refinery turnaround maintenance and rehabilitation, Nigeria still lacks fully functional state-owned refineries operating at commercial capacity.
The Port Harcourt refinery rehabilitation alone reportedly consumed more than $1.5 billion under previous arrangements, while additional funds running into billions were committed to the Warri and Kaduna refineries.
“Yet, despite these huge expenditures, ordinary Nigerians continue to suffer the consequences of fuel import dependency, unstable energy costs, and repeated supply disruptions.
This represents not just policy failure, but a monumental tragedy of public accountability.
It is unacceptable that public institutions continue to announce new agreements without first accounting for previous investments. Nigerians deserve to know what happened to the billions already spent on refinery rehabilitation”.
For ordinary Nigerians battling rising fuel prices and economic hardship, the debate is no longer about agreements or MoUs. It is about results.
Years after billions were spent on refinery rehabilitation, Nigeria still imports much of its refined petroleum products, while citizens continue paying heavily for petrol and diesel.
The latest agreement with Chinese firms may represent a fresh opportunity, but analysts say public confidence will depend entirely on whether fuel begins flowing consistently from the rehabilitated plants.
