Petroleum Refineries in Nigeria: why do they perform so poorly?


In common with other countries around the world, the productivity and performance of refineries in Nigeria over time has been far from spectacular. Different explanations have been given for this phenomenon, including government intrusion in product pricing regime leading to under-recovery, lack/delay in turnaround maintenance (TAM), and pipeline vandalization. This research paper analyzes the root causes of the persistent low performance of this government refineries and indicates that the underperformance of these refineries in Nigeria was largely attributed political interference in the price of Premium Motor Spirit (PMS) via subsidy and the average capacity utilization of these refineries of just 15%, a figure that is critically low. In the context of the above, this paper argues in favour of remedial policy solutions centred on the recapitalization of these refineries via their complete or partial privatization.