Former President Olusegun Obasanjo has disclosed that during his administration, a $750 million proposal by Aliko Dangote to manage Nigeria’s refineries was declined by his successor. In an interview with Channels TV, Obasanjo recounted his efforts to involve private entities in the operation of the Port Harcourt, Warri, and Kaduna refineries to enhance efficiency.
Obasanjo initially approached Shell to manage the refineries, but the company declined, citing several concerns:
- Profit Margins: Shell indicated that their major profits were derived from upstream activities, with downstream operations yielding minimal returns.
- Scale of Operations: At the time, Nigeria’s refineries had capacities ranging from 60,000 to 120,000 barrels, whereas the global average was around 250,000 barrels, making the Nigerian facilities comparatively small.
- Maintenance Issues: The refineries suffered from inadequate maintenance, raising operational concerns.
- Corruption: Pervasive corruption associated with the refineries deterred Shell from involvement.
Following Shell’s refusal, Dangote assembled a team and offered $750 million for a public-private partnership to manage the refineries. However, Obasanjo’s successor refunded Dangote’s payment, opting to retain government control over the facilities. Obasanjo expressed skepticism about this decision, doubting the government’s capability to run the refineries effectively.
He noted that since then, over $2 billion has been expended on the refineries without achieving functional status. In contrast, Obasanjo expressed confidence in Dangote’s ability to successfully operate his privately-owned refinery, emphasizing the inefficiencies of government-managed operations.
This revelation underscores the challenges Nigeria has faced in managing its refineries and the missed opportunities for private sector involvement that could have potentially enhanced their performance.
