The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has called on the Nigerian National Petroleum Company Limited (NNPCL) to subject its proposed technical-equity partnership for the Port Harcourt and Warri refineries to binding performance targets, financial penalties and full commercial disclosure.

The association said the proposed arrangement with two Chinese companies must move beyond a non-binding Memorandum of Understanding (MoU) and establish enforceable obligations covering completion timelines, refinery throughput, availability and consequences for non-performance.

PETROAN’s position followed President Bola Tinubu’s assurance that Nigeria’s refineries would return to operation, with the President stressing that visible activity at a refinery should not be mistaken for commercial success.

Receiving the newly elected leadership of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) at the State House on August 13, Tinubu said: “Ordinary flame and smoke of a refinery doesn’t mean that it’s working until it’s profitable and yields the value for which it is built.”

PETROAN’s National President, Billy Gillis-Harry, described the President’s position as a significant shift from measuring refinery revival by commissioning ceremonies to assessing the assets by profitability, throughput, availability and return on capital.

The association, however, said the new approach would only be meaningful if NNPC translated the proposed partnership into a legally enforceable commercial arrangement.

NNPC had on April 30 signed an MoU in Jiaxing City, China, with Sanjiang Chemical Company Limited and Xinganchen (Fuzhou) Industrial Park Operation and Management Co. Ltd. for a potential Technical Equity Partnership covering completion, operation and maintenance of the Port Harcourt and Warri refineries.

proposed collaboration also includes expansion into petrochemicals and gas-based industrial development.

NNPC said at the time that the MoU represented a step towards identifying technical equity partners, with definitive arrangements to follow subject to further negotiations and customary approvals.

PETROAN said that distinction was critical, warning that Nigeria had a long history of treating memoranda and commissioning events as evidence of progress without ensuring sustained commercial performance.

It therefore demanded that any final agreement contain defined completion dates, guaranteed throughput levels, minimum availability thresholds and enforceable liquidated damages where agreed performance standards were not met.

The association also called for disclosure, within the limits of applicable law, of the proposed equity structure, capital commitments, crude supply and pricing arrangements, offtake agreements and the treatment of accumulated liabilities associated with the refineries.

It further demanded publication of a summary of independent technical due diligence establishing the residual value and remaining useful life of the facilities.

According to PETROAN, the government must also guarantee feedstock supply through effective implementation of the Domestic Crude Supply Obligation under the Petroleum Industry Act, warning that a refinery without dependable crude supply could remain commercially stranded regardless of the money invested in its rehabilitation.

The association’s demands come against the backdrop of years of unsuccessful efforts to restore Nigeria’s state-owned refining capacity.

PETROAN said approximately $4.15 billion was allocated to interventions in the Port Harcourt, Warri and Kaduna refineries between 1993 and 2019, while the Federal Executive Council approved another package of about $3.14 billion in March 2021 for the three facilities. (The Guardian)

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