The Nigerian National Petroleum Company Limited (NNPC Ltd) has announced a major shift in its refinery financing strategy, saying it will no longer fund the Port Harcourt and Warri refineries through loans backed by crude oil production but will instead adopt a performance-driven model designed to make the facilities commercially sustainable.
Under the new approach, the state-owned oil company said the refineries would be required to operate as self-sustaining commercial entities capable of raising financing for their operations based on productivity and profitability rather than relying on government-backed borrowing.
The Group Chief Executive Officer of NNPC Ltd, Mr. Bayo Ojulari, disclosed the new policy on Tuesday while speaking at the Nigeria Oil and Gas Conference in Abuja.
According to him, the company’s long-term objective is to transform the nation’s refineries into commercially viable businesses capable of attracting investment and financing on their own merit.
Ojulari explained that future financing would be linked to operational performance rather than crude oil production volumes.
“We’re moving away from situations where the refineries are taking loans based on barrels and not linked to the productivity and performance of the refineries. We are changing that,” he said.
He added that the company was determined to ensure the refineries generate value rather than remain dependent on contractors and unsustainable financing arrangements.
“Our solution has to be that those refineries are able to work, raise their own financing and deliver, not more contractors coming to take value. That’s the strategy. That’s sustainability. And that’s what will live beyond us,” he stated.
The announcement signals a significant departure from NNPC’s previous refinery funding model as the company intensifies efforts to reposition the state-owned facilities as commercially viable enterprises.
Ojulari said NNPC had already reviewed and streamlined its investment portfolio by removing projects that lacked clear financing plans and realistic profitability prospects.
“We recognise that our portfolio has put NNPC into a lot of problems in the past years, where a lot of infrastructure development projects do not have a clear line of sight to finance. They do not have a clear line of sight to profitability. We eliminated all of that from our portfolio last year,” he said.
The NNPC boss also highlighted the company’s new financing approach for infrastructure projects, citing the Ajaokuta-Kaduna-Kano (AKK) gas pipeline under the “Project Nexus” initiative.
“For the first time, we put in a new financing for infrastructure that has never been done in Nigeria, ‘Project Nexus’, where we are able to put financing against the AKK pipeline based on its own throughput, not from another barrel from anywhere. That is the way we are going,” he explained.
He noted that similar commercial principles would drive the company’s refinery strategy, which would depend on partnerships across engineering, logistics, technology and marketing.
“Our refinery ambition depends on integrated partnership. You can see that across engineering, logistics, technology and marketing. Our energy transition journey requires collaboration with innovators, researchers, development institutions and new technology,” Ojulari added.
His remarks come weeks after NNPC signed a Memorandum of Understanding with Sanjiang Chemical Company Limited and Xinganchen (Fuzhou) Industrial Park Operation and Management Company Ltd to explore a technical equity partnership for the Port Harcourt and Warri refineries.
The proposed arrangement, expected to be modelled after the Nigeria LNG ownership structure, could see the Chinese firms acquire about 51 per cent equity in the refineries as part of efforts to complete rehabilitation works, expand capacity and reposition the facilities as profitable ventures.
