Strike Threats Force Nigerian Government to Backtrack on Refinery Privatization

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Labor strike threats in Nigeria's oil and petroleum sector have forced the government to backtrack on a decision to privatize the country's four oil refineries. The refineries have a combined production capacity of 445,000 barrels per day (BBL/d), but have operated far below this level due to years of mismanagement and lack of maintenance.

In November 2013, Diezani Alison-Madueke, the Minister of Petroleum Resources, announced the federal government's intention to start the privatization process for the four refineries by the first quarter of this year. The Bureau of Public Enterprises (BPE) was directed to drive the process in collaboration with the Petroleum Ministry and the Nigerian National Petroleum Corporation. BPE reported in December 2013 that President Goodluck Jonathan had approved the privatization plan.

On January 3, the president's special adviser, Dr. Reuben Abati, said: "The government is not going to sell any refinery. There is no such plan, and there is no presidential approval for such. Nobody, not even the Minister of Petroleum, has the powers to sell any government property."

Since the plan was launched in November, unions representing senior staff and workers in the sector have been threatening strike action. In addition, it is reported that powerful interests in the country would rather see the privatization plan halted, or that three of the four refineries be sold solely to them so as not to impede their planned investment in the downstream segment of the oil and gas sector.

Two of refineries are located at Port Harcourt; the other two are at Warri and Kaduna. Currently, Nigeria imports 80% of its fuel requirements. The country is Africa's largest crude oil producer and exporter.

For related information, see April 19, 2013, article - Africa's Richest Man to Take on Challenge of $8 Billion Nigerian Refinery.

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