Refineries were inefficient, not completely non-functional, says Festus Osifo
The President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Festus Osifo, has clarified the reasons behind the shutdown of Nigeria’s refineries, saying the decision was not due to complete failure, but rather because of operational inefficiencies.
Osifo made the revelation during an appearance on Politics Today, a current affairs program aired on Channels Television on Tuesday. He explained that although the refineries were technically operational, they were running at a financial loss due to poor material balance between the input (crude oil) and the output (refined petroleum products).
Refineries ran at a loss despite receiving crude oil
According to Osifo, the refineries continued to receive crude oil for processing, but the value of refined products they produced was consistently less than the cost of the crude supplied. This led to persistent financial losses, prompting the need to suspend operations temporarily.
“The refineries were shut down not because they were not working, but because the material balance was poor. For instance, if crude worth about $10 million was supplied, the refined products coming out were valued at about $9.5 million. That meant continuous losses,” Osifo stated.
He emphasized that the refineries were functional to some extent, but their inefficiency made continued operations unsustainable from an economic perspective.
Technical functionality versus operational efficiency
Drawing from his two decades of experience as an engineer, Osifo explained the difference between equipment being functional and being efficient. He noted that while the mechanical systems were capable of operating, they were no longer doing so in a profitable or technically optimized manner.
“I’ve worked in the private sector all my life and practiced engineering for over 20 years. So I understand how mechanical systems work. There is a difference between a piece of equipment working and working efficiently. In this case, the refineries were functioning, but not optimally,” he said.
He reiterated that putting in valuable crude oil and getting less valuable refined products was a key indicator of inefficiency, and continuing under such circumstances was not viable.
NNPC confirms strategy shift to improve refinery operations
Osifo also disclosed that during a recent meeting with the new Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company (NNPC) Limited, the union sought clarity on why operations had been halted. According to him, NNPC management confirmed that the refineries were shut down to allow for a comprehensive reassessment of their operational model.
“We paid a visit to the new GCEO of NNPC Limited, and we put that question to him — why were the refineries shut down? He told us it was about the material balance. The value of input did not match the output, hence the need to pause operations and reexamine the strategy,” he said.
This confirmation from NNPC aligns with PENGASSAN’s position that the refineries were not entirely broken down but were shut down as a preventive measure to avoid further financial losses and to pave the way for future upgrades.
Hope for refinery revitalization remains
Nigeria currently relies heavily on imported refined petroleum products despite being one of Africa’s largest crude oil producers. The government has come under pressure to revive its domestic refining capacity in order to reduce import dependency and stabilize fuel prices.
Efforts are underway to rehabilitate the country’s four refineries — located in Port Harcourt, Warri, and Kaduna — with significant investments earmarked for their upgrade. The Dangote Refinery, a private-sector project, is also expected to play a major role in meeting domestic fuel demand.
Conclusion
The clarification from PENGASSAN and the NNPC sheds new light on the reasons behind Nigeria’s long-standing refinery shutdowns. Rather than being the result of complete system failure, the closures were part of a strategic pause to address inefficiencies and lay the groundwork for more sustainable operations in the future. As the country looks toward refining its own crude oil at scale, the coming years will be crucial in determining the success of this revitalization effort.
