The Nigerian National Petroleum Company Limited (NNPCL) has announced a major shift in the financing of its state-owned refineries, ending the practice of funding rehabilitation and operations through crude oil-backed loans in favour of a performance-driven commercial model.
The new approach will require the Port Harcourt and Warri refineries to operate as financially sustainable businesses capable of attracting investment based on their operational performance rather than relying on financing tied to future crude oil production.
NNPCL Group Chief Executive Officer, Bayo Ojulari, disclosed the strategy on Tuesday during the Nigeria Oil and Gas Conference in Abuja, describing it as part of the company's broader efforts to reposition its downstream assets on a commercially viable footing.
According to Ojulari, future financing will be linked to refinery productivity, efficiency and profitability, replacing a funding structure that relied on crude-backed borrowing.
"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.
"Our solution has to be that those refineries are able to work, raise their own, and deliver, not more contractors coming to take value. That's the strategy. That's sustainability. And that's what will live beyond us."
The policy marks a significant departure from previous funding arrangements and aligns with NNPCL's ongoing transition into a commercially focused energy company.
Ojulari said the company had also reviewed its investment portfolio by removing projects that lacked clear financing pathways or long-term profitability.
"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 stated.
As part of the new financing philosophy, the NNPCL chief pointed to the Ajaokuta-Kaduna-Kano (AKK) gas pipeline as an example of infrastructure funded on the strength of its own commercial prospects rather than through crude-backed arrangements.
"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 said.
He added that the same commercial principles would guide the company's refinery strategy, with greater emphasis 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 and researchers, development institutions and new technology," Ojulari added.
The announcement follows NNPCL's recent signing of 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 partnership, which is expected to be modelled after the Nigeria LNG ownership structure, could see the Chinese companies acquire about a 51 per cent equity stake in the refinery projects, subject to technical, commercial, financial and legal due diligence.
Beyond rehabilitation, the proposed collaboration covers outstanding engineering works, refinery operations and maintenance, capacity expansion, petrochemical integration and gas-based industrial projects around the refinery complexes.
The arrangement is intended to replace the traditional contractor model with long-term equity participation and joint governance, reinforcing NNPCL's objective of transforming the refineries into commercially sustainable assets capable of generating returns and securing independent financing.