Nigeria’s state oil firm, Nigerian National Petroleum Company Limited (NNPC Ltd), is drawing mixed reactions over its decision to engage two Chinese companies to rehabilitate the Warri Refinery and Port Harcourt Refinery under a Technical Equity Partnership arrangement.
The partnership with Sanjiang Chemical Company Limited and Xingcheng Industrial Park is expected to revive the long-idle plants and possibly expand their capacity.
However, energy experts, legal practitioners and economists say the plan raises serious questions about profitability, transparency and whether Nigeria is repeating past mistakes with refinery rehabilitation.
Kelvin Emmanuel, managing partner at Dairy Hills, said the core challenge is technical. He noted that the refineries were built decades ago with limited processing capability and lack the complexity of modern plants, which affects their profit margins.
According to him, the “crack spread” – the margin between the cost of crude and the value of refined products is too low for the facilities to break even, regardless of who operates them. He added that the outdated design and equipment make it difficult for the refineries to compete with modern, highly complex plants globally.
Emmanuel also recalled that similar Chinese interests had previously shown willingness to take over refinery assets in Nigeria in the mid-2000s, a move that did not materialise at the time. He described the current arrangement as a return to an idea that was once rejected.
Energy lawyer Ayodele Oni said the hybrid technical and equity structure could work if it is backed by strong governance, transparency and effective oversight. However, he warned that Nigeria’s history of spending heavily on refinery repairs with little success has created deep public distrust.
He stressed that without clear disclosure of the agreement terms and strict accountability measures, the initiative could face the same risks that undermined previous rehabilitation efforts.
Former President Olusegun Obasanjo has long argued that government-managed refineries in Nigeria are unlikely to function efficiently. He often cites the success of Nigeria LNG Limited, where private investors hold a majority stake, as evidence that public-private partnerships are more effective.
Obasanjo previously shared how he approached Shell to take equity in or operate Nigeria’s refineries, but the company declined, citing small plant sizes, poor maintenance culture and concerns about corruption in refinery operations.
Offering a more optimistic view, development economist Ken Ife suggested that the new arrangement may represent a shift from debt-funded repairs to asset-based financing. He said the structure could involve a Special Purpose Vehicle that shields the federal government from direct financial liability, with partners funding and operating the facilities while recovering costs from performance.
Ife added that if the Chinese firms are relying on state-backed financing, failure to deliver could carry consequences for them in their home country, which may encourage stronger execution discipline.
Despite the differing views, analysts agree that the outcome of the partnership will depend largely on the undisclosed details of the agreement, particularly around funding, revenue sharing and oversight.
Until those details are made public, the NNPC’s latest refinery rehabilitation effort is likely to continue attracting both cautious optimism and strong scepticism across the energy sector.
