Port Harcourt Refinery responsible for high fuel prices in Nigeria

The revitalized Port Harcourt Refining Company (PHRC) in Alesa Eleme, Rivers State, has become a source of concern as findings reveal it contributes significantly to the high cost of fuel in Nigeria.

Despite substantial investments in its rehabilitation, the refinery is plagued by inefficiencies that prevent it from performing optimally, Business Hallmark has uncovered.

The PHRC, comprising two plants—one commissioned in 1965 with a capacity of 60,000 barrels per day and another commissioned in 1989—has faced challenges since its recent refurbishment.

The Nigerian National Petroleum Company Limited (NNPCL) had heralded its reopening in November 2024 as a significant step toward reducing the nation’s reliance on fuel imports and stabilizing prices. However, findings suggest otherwise.

The refinery’s outdated infrastructure, redundant workforce, and bureaucratic bottlenecks are major stumbling blocks.

These issues, coupled with the facility’s reliance on costly semi-processed inputs from other refineries, have made local production more expensive than importing fuel.

Energy experts say the old PHRC plant was designed to operate manually, requiring a massive workforce to function.

In contrast, modern refineries like the Dangote Refinery, which is 85% automated, incur far lower labour costs, translating to cheaper production.

Moreover, the refurbishment project undertaken by Tecnimont of Italy involved rehabilitation rather than a comprehensive upgrade.

This means the plant retains many components that are over six decades old, leading to frequent breakdowns and high maintenance costs.

Reports suggest that fuel refined at the PHRC sells for approximately ₦65 more per litre than that produced at the Dangote Refinery, raising questions about the financial prudence of continued investment in ageing government-owned facilities.

Successive administrations have spent billions of dollars on Nigeria’s four government-owned refineries—Port Harcourt, Warri, and Kaduna—with little to show for it.

Between 1999 and 2015, over ₦400 billion was allocated for turnaround maintenance, while the Buhari and Tinubu administrations spent billions more in recent years. Despite the efforts, the refineries have failed to operate at optimal capacity.

The old PHRC plant, for instance, was designed without modern units like a Vacuum Distillation Unit or a Catalytic Cracking Unit, limiting its capacity to refine crude oil into a full range of products efficiently.

Experts warn that the PHRC’s limitations could have long-term implications. Speaking anonymously, an energy consultant likened the refinery to “a 60-year-old car with a new engine but ageing components that constantly need repairs.”

The refinery’s Director of Operations, Moyi Maidunama, recently admitted to operational challenges during a media tour.

He said production was temporarily reduced to address technical issues, confirming fears that the facility is far from reaching its potential.

The report noted that with Nigeria grappling with these realities, the hope for affordable fuel through local refining remains uncertain.