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Is rehabilitating the Port Harcourt refinery necessary? -The $1.5 billion question

With the paucity of funds the government faces, the spending of $1.5 billion on a refinery should be at the back burner.



Refinery operations still loss-making: Capacity utilisation of the four refineries still 0% 

Earlier this month, the Nigerian Government reportedly approved $1.5bn in funding to repair the Port Harcourt refinery, which had closed down two years ago. Of course, the news was met with some negative reactions from Nigerians. Their sentiment might come from a point of mistrust that the project might be a conduit pipe for corruption. Or perhaps poor management would eventually kill the project, taking Milton Friedman’s “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand” quote into perspective.

However, skepticism and sentiments aside, the economics in funding a refinery repair for $1.5 billion can be debated.

READ: CBN Governor says Dangote refinery will sell refined products to FG in Naira


Nigeria, the Giant of Africa and the largest oil producer in Africa, currently has five refineries in the country; of which four are owned by the Nigerian Government through the Nigerian National Petroleum Corporation (NNPC), while the fifth is owned and operated by Niger Delta Petroleum Resources (NDPR).

The four refineries owned by the Nigerian government have a combined capacity of 445,000 barrels per day: one in Kaduna and three in the Niger Delta region at Warri and Port Harcourt. The Port Harcourt refinery which is the bone of contention has the capacity to refine an estimated 210,000 barrels per day.

The 2019 audited results reflected that Nigeria’s refineries made losses of $439.47 million.   In April 2020, they were all shut pending rehabilitation.

READ: $1.5 billion refinery rehabilitation is brazen and expensive adventure – Atedo Peterside

Is funding the repair necessary?

Nigeria’s affair with refineries is synonymous with a passenger waiting for ages at the bus-stop and all five buses appear at once. This happens to be the case as the Nigerian government has decided to fund a refinery amidst the arrival of the Dangote refinery which should commence later in the year/early 2022 and the BUA refinery which should be operational in 2024. Both refineries have a refining capacity of 650,000 and 200,000 which begs the question why the country is funding a refinery that according to the NNPC Chief, Mele Kyari, would be run by private companies once rehabilitated.

Sigma Pensions

“FG should halt $1.5bn approval for repair of Port Harcourt refinery and subject this brazen & expensive adventure to an informed national debate. Many experts prefer that this refinery is sold “as is” by BPE to core-investors with proven capacity to repair it with their own funds,” tweeted Atedo Peterside, Founder of Stanbic IBTC Bank.

READ: Why FG may increase fuel pump price between N211 – N238/litre soon

The honest truth as the tautology goes is, Nigeria has toiled with the inadequately maintained refineries for years. Mele Kyari is not the first NNPC chief to attempt a revamp, privatise or expand our refineries. Although, you would argue that a country with such oil-producing powers should at least possess one functional refinery that can work to optimal capacity. Over the years, the country has been exposed to saboteurs who have allegedly brought in dirty petrol from Europe and so having a refinery would be in our best interests.

However, the timing and prioritization is a concern. The 3-phase-44-month repair project will be funded from sources including the Nigerian National Petroleum (NNPC), Internally Generated Revenue (IGR), budgetary provisions, and Afreximbank.

The Minister of Petroleum, Timipre Sylva has also said that the country would implement rehabilitation work on the Kaduna and Warri refineries on or before May 2023. `This will also be funded from government coffers.

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READ: Malabu Oil Scandal: Prosecutors demand JPMorgan documents

Which begs the question, Why? The country will have a problem of Overcapacity. We have the Dangote’s refinery, (650bpd) the BUA refinery (200bpd) and other commercial refineries (+/- 200bpd) in addition to the proposed rehabilitated state refineries (440bpd) coming on board. Nigeria could possibly have the capacity of refining approximately 1.5 million bpd. With the consumption level and demand for refined products in Nigeria falling within the range of 450,000 and 500,000bpd according to the Petroleum Products Pricing Regulatory Agency (PPPRA), the country that once imported refined petroleum products will have the irony of overcapacity.

Much ado for a business that is hardly profitable. Globally, refining margins are very poor. Global Consulting firm, Mckinsey describes how the profitability of a refinery comes from “the difference in value between the crude oil that it processes and the petroleum products that it produces. Most of a refiner’s margin comes from the higher-value “light products” (i.e., gasoline, diesel, and jet fuel) that it makes.”

Most of these “light products” will face their days of reckoning when Climate Change policies start to kick in.

To further buttress why refinery businesses should be avoided by the NNPC. Saudi Aramco just released its 2020 results and despite the upbeat revenues and profits made, the company for a second consecutive year lost money on its downstream division (refining and chemicals).

There were over 600 operating refineries around the world as of the beginning of 2017.  Last year after the oil price crash, Alan Gelder, head of downstream oil at Wood Mackenzie, lamented about his company’s global composite gross refining margin which averaged between $0.20/barrel in May and June last year. The $0.20 per barrel is a deviation from their 2020 average forecast of $1.40/barrel. He further added that a few refineries are in serious threat of closure in Europe alone over the next three years.

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With the paucity of funds the government faces, the spending of $1.5 billion on a refinery should be at the back burner. The allocation would be better served for other critical infrastructure that would bring revenue or fix economic problems. The long-term values of refineries will battle Climate change policies and lower demand/lower oil prices as the market cycles. The Lagos to Ibadan train is an excellent project the Federal Government has done. Similar projects like that would boost citizens morale and the economy rather than the capital-intensive, recurring-expending late to the party refinery project.

Dapo-Thomas Opeoluwa is an Investment Banker and Energy analyst. He holds a degree in MSc. International Business, Banking and Finance from the University of Dundee and also holds a B.Sc in Economics from Redeemers University. As an Oil Analyst at Nairametrics, he focuses mostly on the energy sector, fundamentals for oil prices and analysis behind every market move. Opeoluwa is also experienced in the areas of politics, business consultancy, and investments. You may contact him via his email- [email protected]

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AfCFTA to promote inclusive trades for women and youth in Africa

The SMEs and Startup ecosystem in Nigeria which are dominated by women and youths should equally take advantage of these opportunities.



Border closure is a threat to forthcoming Lagos Trade Fair - LCCI 

Inclusive economic development remains one of the core elements of both the African Union’s Agenda 2063 and the United Nations Sustainable Development Goals (SDGs). In furtherance of this, article 3(e) of the AfCFTA main Agreement and article 27(2)(d) of the Protocol on Trade in Services specifically mandate State parties to promote gender equality and “improve the export capacity of both formal and informal service suppliers, with particular attention to micro, small and medium-sized; women and youth service suppliers.

With over 60 percent of its population being under the age of 25, Africa is regarded as the youngest continent in the world. This presents both challenges and opportunities for the continent. For instance, in Nigeria, the young population has led to attendant social risks as unemployment nears 40% creating a ticking time bomb. The popular saying is that an idle mind is the devil’s workshop.

On the positive side, however, the young population when properly harnessed will heighten productivity and provide affordable labour which in turn may lead to increase in investment. Nigerian youths just like their counterparts in other African States are known to be very innovative and enterprising. With the right policy and the enabling infrastructures, this energic population can drive the AfCFTA agenda.

Relatedly, women constitute most of the players in the SMEs ecosystem, accounting for nearly 90% of the labour force in the informal sector. A visit to the popular Balogun market in Lagos Nigeria will attest to this fact. No doubt, regional informal trades amongst women and youth within the ECOWAS region have been going on even before AfCFTA. But the new trade deal is meant to open the door to a population of 1.3 Billion people with a combined GDP of USD2.6 Trillion.

This is a huge opportunity and further buttresses the need for gender-sensitive and youth-centric implementation that will ensure sustainable and inclusive growth. As noted by a commentator, women and youth traders are less likely to be equipped with the appropriate skills, technology and resources that would enable them to benefit from trade and trade liberalization as they continue to suffer from invisibility, stigmatization, violence, harassment, poor working conditions and lack of recognition for their economic contribution.

These challenges are made worse by non-tariff barriers such as poor infrastructure, insecurity, lack of access to funds, high unemployment, weak currency, cost of capital, multiple taxations, and other regulatory hurdles.  A clear example of the hurdle being the recent intervention by the agencies of the Federal Government of Nigeria in the areas of FINTECH and Cryptocurrency.

Just last week, the Securities and Exchange Commission issued a circular advising Capital Market Operators to sever ties with platforms that facilitate access to trading in securities listed in foreign markets. While recognizing the role of the regulators to protect the investing Nigerian public and their assets, however, the interventions have been interpreted by many as capable of sending a wrong signal and acting as disincentives to innovation. Again, this brings to the fore the need for Continental Free Trade that fosters inclusiveness with member States initiating policies that create more opportunities for the youth and women.

At the webinar held on 29 March 2021 to mark the signing of the MOU on strategic partnership between the AfCFTA Secretariat and the United Nations Development Programme (UNDP), the AfCFTA Secretary-General Mr Wamkele Mene re-echoed the need for inclusiveness in the AfCFTA implementation with the following words:

Sigma Pensions

We’ve learnt from other trade agreements in the world. And the lesson to draw is that if a trade agreement neglects the most vulnerable segment of the society, if a trade agreement is perceived to benefit only the multi-national corporations, only the elite, it shall not succeed and it shall not have legitimacy as far as the citizens are concerned. And so that is why I have made it my priority in the implementation of this agreement that there should be shared benefits, there should be shared responsibility with Africans across the length and breadth of the African continent in concrete areas such as affirmative action for women in trade. We are looking at concrete ways in which we can expand the benefit for young people and for women in trade. This is the type of development that we require in order to make this agreement successful. This is the type of development that we require to make sure that the benefits are inclusive.

This Statement coming from the AfCFTA Secretariat is a clear indication of the aspiration towards gender-balanced and youth-sensitive AfCFTA. However, one is not unmindful of the limited role of the AfCFTA Secretariat in the implementation process.  The actual implementation is done at the national and regional level. And this is not to underestimate the very critical albeit complementary role that the Secretariat plays in this regard.

Therefore, the change must start from each member country and percolate through the regional economic blocs and finally to the entire Africa. Nigeria through its agencies such as the Central Bank of Nigeria (assisted by the private sector) can support inclusiveness by providing AfCFTA-focused low-interest financing, training of the SMEs on cross-border trades as well as other incentives to promote the engagement of women and youth in trades on the continent.

The impact of the COVID-19 pandemic on youth and women-led businesses has widened the economic gap and further impoverished those at the lowest rung on the economic ladder – mostly women and youths. This calls for heightened capacity building in creating new trading and entrepreneurial opportunities for all. With the constant value erosion in the local currency and low-yield environment, entrepreneurs and SMEs in Nigeria can, through cross-border trades, hedge against business risks and equally take advantage of possible arbitrage that exists in different markets within the AfCFTA.

A shift from the business-as-usual approach on the issue of women and youth is needed under AfCFTA to ensure that the objectives are actualized. Although the AfCFTA is not the magic bullet or the cure for all the economic challenges facing the youths and women in Africa, it is hoped that when fully and equitably implemented, it will go a long way to address some of the factors inhibiting the economic growth of these vulnerable groups.

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A recent report commissioned by the UNDP and the AfCFTA Secretariat titled “The Futures Report: Making the AfCFTA Work for Women and Youth” which was published in December 2020 has shown that beyond the projections, numbers and negotiations, the realization of the AfCFTA objectives will depend on decisive actions and collective efforts of the African people. Therefore, concrete measures and investment are needed to ensure that women and youths, who account for the majority of the population, business owners and workforce can be better integrated into the value chains, jobs and opportunities available under the AfCFTA.

As shown by the Report, many entrepreneurs and SMEs across Africa are already taking steps and positioning themselves to benefit from the free trade area and scale their businesses. Some SMEs owners interviewed noted that they are increasing their production lines and sourcing for inter-continental partnership ahead of the progressive implementation of the various phases of the trade regime.

The SMEs and Startup ecosystem in Nigeria which are dominated by women and youths should equally take advantage of these opportunities. Finally, given that trades in goods and services are fast moving into the digital space, the AfCFTA members States need to invest heavily in digital infrastructures and urgently address the high cost of data in Africa which has made it difficult for the majority of women and youths to access opportunities available online.

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Ikigai – Adopting the Japanese model for finding purpose and financial freedom

How do we create a life that is financially independent and inherently meaningful?



Financial system and freedom

Okinawa is a beautiful Japanese island with a very high life expectancy and a disproportionately high number of happy people. In addition, Okinawa has one of the highest concentrations of centenarians — people who are 100 years or older – in the world. Okinawan men live till 84 on average and their women live till 90. They are also very healthy, fit, happy, and physically/psychologically independent.

A host of researchers have explored different explanations for this unique phenomenon. One common thread that consistently emerges from these studies is Ikigai – a Japanese word that means “a reason for being” or “a purpose for living.”

Ikigai travels well across the world. It encompasses the universal search for purpose and a reason for living. We all seek a meaningful life and hope that our lives will count for something. Quite often, we start by finding purpose in work. But with time, it becomes clear that work alone is an insufficient reason for living. Ikigai promises a better way. It encapsulates 4 key concepts and the bliss that exists at their intersections.

The 4 concepts are (see the diagram below):

  1. What you love to do.
  2. What you are good at.
  3. What the world needs.
  4. What you can be paid for.

The idea is that we will find a reason to live when we find something we love to do (a hobby), something in which we seek mastery (a skill), something the world really needs (a market focus), and something for which we get paid (a profession or business).

The intersections of Ikigai are also important. They encapsulate our passion, mission, vocation, and profession while postulating that our lives can only find meaning when we seek to balance all these concepts.

But Ikigai is not only about finding meaning in life. It is also applicable to our sometimes-all-encompassing goal of achieving financial independence. I define financial independence as the state where money does not dictate our lives anymore. An amazing place where we can live a life that is independent of financial considerations because our lives are funded by passive income that does not require our physical or psychological involvement. My experience is that we often need to find the areas where our profession/business resonates with our passion and market dynamics to move towards the financial independence utopia.

Sigma Pensions

This is what I teach and espouse. How do we create a life that is financially independent and inherently meaningful?

Over the next few years, I will write a monthly article for Nairametrics where I will explore different aspects of Ikigai. My key focus will be on personal finance and how we can build a fort to protect our lives and investments. After all, the good book says, “money is a defense.”

Thanks for reading. Let’s walk towards Ikigai together.


Dr. Tayo Oyedeji is the CEO of Overwood Investment Limited ( His career spans finance, marketing, and consulting across Europe, North America, and Africa. Dr. Oyedeji holds a Ph.D. from Missouri-Columbia and an MBA from Oxford University. 

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