The Nigerian National Petroleum Company Limited has announced plans to end the practice of funding the Port Harcourt and Warri refineries through crude-backed loans, adopting a performance-based financing model aimed at ensuring the facilities become commercially viable.

Under the new approach, both refineries will be required to operate as financially self-sustaining entities, raising funds for their operations instead of relying on loans from the national oil company.

The Group Chief Executive Officer of NNPC Ltd, Bayo Ojulari, disclosed this on Tuesday while speaking at the Nigeria Oil and Gas Conference in Abuja.

Ojulari said the company’s long-term strategy is to transform the refineries into commercially viable businesses capable of securing financing independently.

He explained that future funding would be based on the refineries’ operational performance and productivity, rather than on crude oil volumes.

The announcement marks a significant shift in NNPC’s approach to refinery financing as it seeks to reposition the state-owned facilities under commercially sustainable business models.

Ojulari said the company has already begun restructuring its investment portfolio by discontinuing projects that lack clear financing plans and viable profitability prospects.

“We recognise that our portfolio has put NNPC into a lot of problems in the past years, where a lot of infrastructure development projects do not have a clear line of sight to finance. They do not have a clear line of sight to profitability. We eliminated all of that from our portfolio last year,” he said.

He added that the company has adopted a new financing model for major infrastructure projects, citing the Ajaokuta-Kaduna-Kano gas pipeline as a key example.

“For the first time, we put in a new financing for infrastructure that has never been done in Nigeria, ‘Project Nexus’, where we are able to put financing against the AKK pipeline based on its own throughput, not from another barrel from anywhere. That is the way we are going,” Ojulari stated.

Ojulari said the same commercial principles would guide NNPC’s refinery plans, with the projects driven by integrated partnerships spanning engineering, logistics, technology and marketing.

“Our refinery ambition depends on integrated partnership. You can see that across engineering, logistics, technology, and marketing. Our energy transition journey requires collaboration with innovators and researchers, development institutions and new technology,” he added.

Ojulari’s remarks come weeks after NNPC signed a Memorandum of Understanding with Sanjiang Chemical Company Limited and Xinganchen (Fuzhou) Industrial Park Operation and Management Company Ltd to explore a technical equity partnership for the Port Harcourt and Warri refineries.

Under the proposed arrangement, which could be modelled after the Nigeria LNG ownership structure, the Chinese firms may acquire a 51 per cent stake in the refineries as part of plans to rehabilitate, expand and commercially reposition the facilities.