NNPC, Chinese firms’ deal will unlock refineries – Marketers

Fuel marketers have thrown their weight behind the Nigerian National Petroleum Company Limited’s plan to revive the Port Harcourt and Warri refineries through a partnership with two Chinese firms, saying the move could unlock idle investments in the dormant assets.

The NNPC on Monday signed a Memorandum of Understanding with Sanjiang Chemical Company Limited and Xingcheng (Fuzhou) Industrial Park Operation and Management Co., Ltd. to drive the rehabilitation, restart, and expansion of the Port Harcourt and Warri refineries through a technical equity partnership model.

Speaking in an interview with our correspondent, the Executive Secretary of the Major Energies Marketers Association of Nigeria, Clement Isong, said bringing in technically competent partners with equity stakes would ensure efficiency and sustainability.

According to him, a lot of money had been invested in the refinery in the past with no returns, saying the new deal would unlock the tied-down capital.

“Let me be clear. We already own the assets. And in owning the assets, they have already worked for many years for the country. Now, for a while, the assets have not been producing. They have analysed many ways of getting it to produce sustainably.

“Remember that a lot of money has already been spent on the turnaround maintenance of the assets. Remember that the asset has to be upgraded for it to produce products that meet today’s specs. So, any investment by a competent party that would bring output from the previously invested capital can only be positive because the previous investments in the assets are tied-down capital that are not yielding any output.

“So, bringing a technically competent third party that will not only complete the investment but will also operate those assets efficiently and sustainably can only be good for the country,” Isong said.

On the structure of the deal, Isong stressed that the key difference is that the Chinese partners are taking equity in the assets as part owners and would want the refinery to work so they can get returns on their investments.

He described the model as innovative, adding that every Nigerian would be happy if the facilities worked again. He said the NNPC did not have the internal competence and capacity to run the refineries without a technical partner.

Despite criticisms from some stakeholders, including the billionaire businessman Aliko Dangote and former President Olusegun Obasanjo, that the plants may not work again, Isong maintained that the approach could be a pleasant surprise.

“This is an innovative way of getting the assets to work, like I say, in an efficient and sustainable way. The challenge we knew was that NNPC did not have the internal competence or capacity to run those refineries efficiently. Now, they have brought a third party, and the key difference is that the third party they have brought is taking equity. He’s a part-owner of the refinery and so would want the refinery to work so he can get returns on his investment.

“I think it’s a very interesting approach. And even for those people who said that it will never work again, I’m sure if it works again, their surprise will be very pleasant. They will be happy. I think every Nigerian will be happy if those assets begin to work and contribute to the national productivity. So, I think it can only be a good thing,” he said.

Similarly, the Petroleum Products Retail Outlets Owners Association of Nigeria described the agreement as a major shift in Nigeria’s refining strategy.

The group commended President Bola Tinubu and the leadership of the NNPC Group Chief Executive Officer, Bayo Ojulari, for pursuing what it called a bold reform.

PETROAN National President, Billy Gillis-Harry, said the agreement was “a timely and strategic intervention that signals a new direction for Nigeria’s refining sector.” He emphasised that the technical equity model would fix longstanding operational failures.

“The introduction of a technical equity partnership model would bring much-needed operational discipline, efficiency, and accountability that had been lacking in previous refinery rehabilitation efforts,” he said.

Gillis-Harry added that the initiative marks “a decisive shift from past approaches that yielded limited results to a more performance-driven model that ensures long-term sustainability”.

The PETROAN boss stated that the project would create thousands of direct and indirect jobs across engineering, logistics, retail, and support services while also reducing unemployment.

He added that increased domestic refining would reduce fuel importation, conserve foreign exchange, stabilise the naira, and stimulate growth across multiple sectors of the economy.

According to him, the integration of refining with petrochemical and gas hubs would enhance value creation and align Nigeria with global best practices. PETROAN also said the initiative would boost government revenues through taxes and exports while improving infrastructure and livelihoods in host communities in Rivers and Delta states.

The association president further linked the deal to potential relief for consumers. He said increased refining capacity and competition would create a pathway for more competitive fuel pricing, which is expected to “ultimately lead to lower fuel costs and improved affordability for citizens”.

PETROAN also stressed that the reform reflects a broader commitment to energy security and economic diversification.

According to a statement issued on Monday by the Chief Corporate Communications Officer of NNPC Ltd, Andy Odeh, the MoU sets the stage for a potential technical equity partnership aimed at completing outstanding work at the Port Harcourt and Warri refineries, as well as ensuring their long-term operational efficiency. Both facilities have a combined capacity of 335,000 barrels per day.

The national oil firm said the collaboration would go beyond rehabilitation, extending into full-scale operation and maintenance of the facilities to achieve “best-in-class, sustainable performance”.

Under the proposed framework, the Chinese partners are expected to bring not just engineering expertise, but also operational discipline and investment capacity, aligning their returns with the performance of the refineries.

The scope of the collaboration, as outlined by NNPC, includes the development of co-located gas-based industrial hubs, which could transform the Port Harcourt and Warri complexes into integrated energy and petrochemical centres.

However, the new deal raises concerns about the fate of previous agreements signed by the company to accelerate the optimisation of the facility, especially as stakeholders requested in the past that the refineries be sold off.