How the revived Warri and Port Harcourt refineries will boost Nigeria’s economy

Nigeria has taken significant strides in reviving its oil refineries, a move hailed by economists and industry experts as a potential game-changer for the country’s economy. The restoration of the Warri Refinery and Petrochemical Company (WRPC) and the Port Harcourt Refinery marks a pivotal moment in addressing Nigeria’s long-standing dependence on imported petroleum products.

Economic Impact of Functional Refineries

Professor Kabiru Isa Dandago, an economics expert at Bayero University, Kano, emphasized the profound benefits of these developments. He highlighted how the operational refineries could stabilize the naira by reducing the pressure on foreign exchange used for fuel imports. “With the Warri refinery back in operation, we expect a reduction in the dollar exchange rate, which should, in turn, lower the prices of goods and services, easing the financial burden on Nigerians,” he said.

The refineries are now producing essential petroleum products like petrol, diesel, and kerosene. This local production could lead to a decrease in fuel prices, making transportation and logistics more affordable. Lower transportation costs often translate to reduced prices for goods, benefiting both businesses and consumers.

Gradual Progress at Warri Refinery

The Warri Refinery, located in Delta State, has a capacity of 125,000 barrels per day. While operations have resumed, the refinery is not yet functioning at full capacity. According to Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), the refinery’s first phase, known as Area 1, is operational. This phase focuses on producing diesel, kerosene, heavy and light naphtha, among other products.

Kyari noted that further rehabilitation work is ongoing to bring the refinery to full capacity. The ability to export products from Area 1 to other countries also presents an opportunity for Nigeria to generate additional revenue.

Presidential Endorsement and Broader Plans

President Bola Tinubu described the reopening of the Warri Refinery as a “remarkable achievement” that strengthens public confidence in his administration. He has also urged the NNPCL to expedite the rehabilitation of the Kaduna and Port Harcourt refineries to boost domestic production further.

The Port Harcourt Refinery, which began operations in November 2024 after years of inactivity, has faced challenges but is now operating at 60% capacity. This refinery can process up to 600,000 barrels of crude oil daily, a significant contribution to Nigeria’s energy needs.

Overcoming Historical Challenges

The journey to revive Nigeria’s refineries has been fraught with challenges. Since its commissioning in 1978, the Warri Refinery has experienced maintenance issues, funding constraints, and management problems, leading to its shutdown in 2019. Efforts to rehabilitate the refinery began in 2021 under former President Muhammadu Buhari but faced repeated delays.

The successful resumption of operations in late 2024 signals a turning point. However, questions remain about how these refineries will consistently meet Nigeria’s domestic fuel demands and alleviate the high costs of petroleum products.

Conclusion

The rehabilitation of Nigeria’s refineries represents a critical step toward economic recovery and energy independence. While challenges persist, the progress made so far offers hope for a future where local production reduces the nation’s reliance on imports, stabilizes the economy, and improves the quality of life for Nigerians.