PETROAN, ‘Abiku Refineries’ and the Comfort of Collapse
A sector that keeps reviving what has repeatedly failed, while resisting what works, is not trapped by fate but comforted by collapse. PETROAN’s latest outburst exposes just how invested some interests remain in Nigeria’s ritualised dysfunction. By Abiodun Alade
Nigeria’s oil and gas sector has endured many seasons of noise masquerading as advocacy. From time to time, pressure is applied not in pursuit of reform, but in defence of habits that have outlived their usefulness. The latest episode is revealing not because it is novel, but because it exposes, with unusual clarity, the discomfort of rent seeking intermediaries when genuine change threatens familiar margins.
That discomfort has recently found expression in the agitation by the Petroleum Products Retail Outlets Owners Association of Nigeria over comments made by Bayo Ojulari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited. In demanding his resignation, PETROAN has inadvertently illuminated a deeper problem in Nigeria’s petroleum political economy: the resistance of entrenched intermediaries to reform that narrows the space for easy rent.
Ojulari’s offence was not misconduct. It was candour. He observed, correctly, that the Dangote Petroleum Refinery has provided breathing space at a time when government owned refineries are shut, and that the NNPC should not rush back into the familiar ritual of pouring millions of dollars into turnaround maintenance for facilities that have become monuments to waste. This is not heresy. It is prudence.
For a quarter of a century, Nigeria has chased the mirage of refinery rehabilitation. Public records suggest that between $18 billion and $25 billion has been spent on turnaround maintenance and rehabilitation of the four state owned refineries, with little to show for it. Like the abiku of Yoruba lore, these refineries are revived with ceremony, only to relapse almost immediately. Working today, dying tomorrow. To insist that this cycle must continue, regardless of evidence, is not patriotism. It is sabotage dressed as concern.
PETROAN’s reaction is therefore instructive. In a recent statement, its spokesman, Joseph Obele, described it as “most worrisome” that there was no urgency to restart the Port Harcourt Refinery because Dangote is meeting current fuel needs. The association went further, threatening to lobby civil society groups and pursue legal options to force the removal of the NNPC GCEO should the refinery not resume operations by March 1. This is not policy engagement. It is pressure politics.
Why would a body of retailers, whose business model depends largely on buying and reselling products refined elsewhere, be so hostile to domestic refining capacity? The answer lies in incentives. Domestic refineries compress margins. They reduce arbitrage. They expose inefficiencies that thrive in scarcity. For decades, fuel importation and the dysfunction it encouraged created space for unearned profits across the value chain. Local refining threatens that arrangement.
History offers a useful parallel. In Mancur Olson’s classic work The Logic of Collective Action, he explains how small, organised interest groups often prevail over the broader public interest because they are better motivated to defend narrow gains. PETROAN’s conduct fits this pattern. It speaks loudly, often, and with confidence, but for whom does it really speak.
It is also worth recalling PETROAN’s posture during earlier periods of distress in the sector. At moments when the national oil company was accumulating unsustainable obligations, remitting little or nothing to the Federation Account and absorbing enormous costs, commendations flowed freely. Laurels were dished out even as the system bled. That era ended with the Federal Government writing off substantial debts, including about $1.42 billion and N5.57 trillion after reconciliation. Nigerians paid the price for that indulgence.
During the years when Nigeria’s petroleum sector was driven to the brink, PETROAN looked the other way. The record is clear. The national oil company captured the entire value chain, seizing crude exports, monopolising refined product imports, and then forcing the Federal Government to borrow an estimated N500 billion monthly to sustain opaque subsidy claims. By controlling nearly 90 per cent of the roughly $3 billion in monthly crude proceeds routed through the Central Bank, and combining this with subsidy payments and other shocks, fiscal space collapsed, driving the government into massive Ways and Means financing.
At the same time, refinery rehabilitation became an industry without output. About $10 billion was spent over a decade on maintenance with nothing to show for it, not even a litre of petrol. A further $3 billion was later securitised against future crude sales for yet another failed repair cycle, a sum that could have delivered dozens of modular refineries. Even after the Petroleum Industry Act prioritised Domestic Crude Obligation, compliance remained elusive, while Nigeria continued to burn scarce foreign exchange importing sub standard fuel into a system with no functional midstream. These were not marginal errors but a business model that plunged the country into crisis.
Throughout it all, PETROAN’s voice was conspicuously muted, generous with praise where scrutiny was required.
This is why the current agitation rings hollow. Reform always unsettles those who prospered under disorder. President Bola Tinubu’s administration has signalled, through words and decisions, that it intends to break with the old script. Ojulari’s mandate at NNPC is clear: commercial discipline, efficiency and profitability. That mandate cannot be reconciled with endless rehabilitation theatre.
There is another uncomfortable question PETROAN has not answered. What value does its leadership bring to the petroleum sector beyond television appearances and press statements? Serious business leadership is measured in assets built, jobs created and value added. Publicly available information suggests that some of the companies associated with PETROAN’s leadership are modest in scale, with limited project footprints. Allegations and controversies reported in the public domain around some of these entities, whether in the power metering space or elsewhere, only reinforce the need for caution in elevating moral authority. Perhaps PETROAN’s members would do well to examine the records of those who speak in their name, before an association meant to represent many is reduced to the private estate of a few, and recast as an adversary of the public interest.
This is not to say that retailers have no role in policy debate. They do. But influence must be earned through insight, integrity and alignment with the national interest. Threats and ultimatums betray a lack of confidence in argument.
Nigeria stands at a fork in the road. One path leads back to ritualised waste, institutional failure and the comfort of familiar inefficiencies. The other leads to local capacity, competition and a petroleum industry that finally works for Nigerians. The Dangote Refinery is not a silver bullet, but it is a signal that the old excuses are losing credibility.
PETROAN’s nuisance value thrives only when reformers flinch. President Tinubu has shown little appetite for cheap blackmail. Ojulari enjoys his confidence for a reason. The task before NNPC is too important to be derailed by those nostalgic for a broken system. If PETROAN wishes to be relevant in this new era, it must evolve from noise to nuance. Otherwise, history will remember it not as a defender of consumers, but as a footnote in Nigeria’s long struggle to escape the tyranny of waste.
Abiodun, a communications specialist writes from Lagos
