The poor performance of state-owned petroleum refineries in Nigeria has been the subject of much academic discourse [1, 26, 47, 71]. The interest generated by this industry is understandably underpinned by its impact on the average cost of living in Nigeria. This is because the non-availability of locally refined petroleum products (RPPs) in Nigeria usually result in their costly imports, thereby raising the cost of transportation and commodities with the consumer at the receiving end . Essentially, the efficiency of this industry will positively contribute to the national economy by helping to stabilise the cost of businesses and save the nation unnecessary costs from imports [46, 61].
Nigeria has four State-owned refineries operated by its National Oil Company—Nigerian National Petroleum Corporation (NNPC). These refineries have a total installed capacity of 445,000 barrels per stream day (BPSD) and are strategically located across the country at Kaduna, Warri, and Port Harcourt. The Port Harcourt refineries comprise the two refineries built in 1965 and 1989 with a current capacity of 60,000-bpsd and 150,000-bpsd, respectively. The other two refineries were built in 1978 in Warri and 1980 in Kaduna with current capacities of 125,000-bpsd and 110,000-bpsd, respectively [69, 71].
With the total demand of RPPs in Nigeria in the range of 600,000–700,000 barrels per day (bpd) , it is surprising that the local refineries only function at less than 20% of their combined installed capacity . According to Iheukwumere et al. , for more than 2 decades, the low productivity of these refineries has gradually created a significant gap of about 500,000–600,000 bpd of RPPs in the country. This gap is currently being filled by imports from northwestern Europe, the United States, and the Middle East .
By comparison, the performance of NNPC refineries lags significantly behind even by the standards of the Organisation of Petroleum Exporting Countries (OPEC) . For instance, the data obtained from NNPC Annual Statistical Bulletins from 2001 to 2019, illustrate the extent of this decrease over time. Figure 1 shows that the average combined capacity utilisation (percentage ratio of production to installed capacity) of the four NNPC refineries has been below 20% since 2013. The few spikes in the chart represent occasional periods of improved performance brought about by short-term technical interventions in some of the refineries .
This decline is quite untypical for other State-run refineries within OPEC member states, such as Kuwait, Saudi Arabia, Iran, and others, with better utilisation rates . According to reports from Oil and Energy Trends , the average capacity utilisation for Middle East refineries in 2018 was 86.4%, which is more than the global average of 83.5%. This implies that NNPC’s average refinery utilisation rate is only about 24% of the global average.
In addition, Nigeria’s per capita local refining capacity is currently the least amongst OPEC countries, except for Equatorial Guinea, which currently has no refineries . Data obtained from OPEC statistical bulletin for 2019 show that while countries in the Middle East lead with impressive per capita refining margins, Nigeria lags significantly behind with about 0.04 barrels of locally refined petroleum products (RPPs) for every 1000 persons. This is a sharp contrast from the figures for other African OPEC member States like Algeria and Libya with per capita refining capacity of 15 and 9 bpd, respectively, for every 1000 persons . It is, therefore, no surprise that Nigeria’s imports of RPPs are far more than those of other OPEC member States.
Clearly, Nigeria’s standard falls far below industry expectations and demands urgent corrective action. Expectedly, this issue has received much attention from the Nigerian government and certain efforts have equally been made in the past to address these problems, albeit without much success [21, 26, 71]. Some of the efforts made include the occasional refurbishment of the refineries, the award of licences to the private sector for the construction of small-to-medium-scale modular refineries and the attempted sale or acquisition of the refineries by the private sector [4, 37]. The failure of these initiatives has been linked to several factors, mainly within the categories of political, economic, social, and technical (PEST) issues [47, 54, 71].
Using the findings from research, this study identified the relevant performance challenges of the refineries as indicated by Table 1.
The identified factors as shown in Table 1 were measured using a Likert-type questionnaire to obtain the professional opinions of experts who work in the four State-run refineries. The study was limited in scope to the effects of the PEST factors on how they affect the performance of the refineries. PEST is a recognised tool for the analysis of relevant issues affecting an organisation’s performance with regards to its business environment . According to Yuksel , the PEST framework helps focus research questions around relevant feasible issues.
In context, political factors (P) imply the various forms of government interventions, applicable national legislations, expert regional projections, and outlook. It also includes identified political factors from published sources, which directly or indirectly impact on the refineries’ performance. Economic factors (E) involve the macroeconomic conditions, such as project costs and expectations, competing factors for government resources and their implications on the refineries’ performance. Social factors (S) include the various social, cultural, behavioural, and other demographic factors of the external environment which bear direct or indirect consequences on the refineries, while technical factors (T) refer to the various technologically related activities, infrastructures, training, skills, including gaps in local capacity, which present challenges to the refineries’ operations.
To understand the challenges of the NNPC refineries, it is necessary to present brief information about these assets, including their process units.
Port Harcourt Refining Company (PHRC I and II)
The Port Harcourt refinery comprises the old refinery (PHRC I) with 60,000-bpsd and the new refinery (PHRC II) with 150,000-bpsd. According to Turner , PHRC I was built by a consortium of Shell-BP and initially had a shared ownership structure of 50% government stake and 25% stake each for Shell and BP. However, the facility was acquired by the Nigerian government in an outright buyout in 1979 due to geopolitical reasons .
According to information from NNPC website, NNPC , the Port Harcourt refineries houses several process units across five process areas 1–5. Some of the key units include the Crude Distillation Unit (CDU), Vacuum Distillation Unit (VDU), Naphtha Hydrotreating Unit (NHU), the Catalytic Reforming Unit (CRU), the Kero Hydrotreating Unit (KHU), and the Fluid Catalytic Cracking Unit (FCCU).
The PHRC produces a wide range of refined petroleum products (RPPs), such as Premium Motor Spirit (PMS), Liquified Petroleum Gas (LPG), Automotive Gas Oil (AGO), Kerosene (aviation and domestic), Low Pour Fuel Oil (LPFO) and High Pour Fuel Oil (HPFO).
According to data from NNPC Annual Statistical Bulletins (ASB) (2001–2019), PHRC I has remained mostly inoperative for the past 10 years while PHRC II continues to run at low capacity. Unfortunately, since 2019, these facilities have been mostly under a shutdown for a maintenance pre-inspection .
Warri Refining and Petrochemical Company (WRPC)
The Warri refinery (WRPC) is the first Nigerian government wholly owned refinery . Built in 1978 by the Italian Snamprogetti at a cost of US $478M, WRPC has a current installed capacity of 125,000-bpsd . Chima et al.  note that WRPC was installed as a complex conversion plant to process LPG, PMS, kerosene, AGO and fuel oil. It also produces propylene pellets from propylene-rich feed as well as carbon black from fuel oil. The facility was set up to take crude oil from a blend of Escravos and Ughelli crudes .
According to Chima et al. , the main process units at the Warri refinery include the Crude Distillation Unit, Naphtha Hydrotreating Unit, Catalytic Reformer Unit, Kerosene Hydrotreating Unit, Vacuum Distillation Unit, and the Fluid Catalytic Cracker Unit.
Recently, WRPC has experienced significant production interruptions due to several challenges arising from attacks on its crude oil supply pipelines and constant breakdown due to technical difficulties [47, 71]. Consequently, the capacity utilisation of this plant has fluctuated currently to sub-20% levels over the last decade (NNPC ASB 2001–2019).
Kaduna Refining and Petrochemical Company (KRPC)
The Kaduna refinery (KRPC) was built in 1979 by the Japanese Chiyoda Engineering and Construction Company at a cost of US $575M . The facility has a current installed capacity of 110,000-bpsd. The refinery comprises two plants—a Fuels plant of 60,000-bpsd and a Lubes plant of 50,000-bpsd capacity. The main process units at the KRPC include the Crude Distillation Unit (CDU), Vacuum Distillation Unit (VDU), Fluid Catalytic Cracking Unit (FCCU), Naphtha Hydrotreating Unit (NHU), Kerosene Hydrotreater, Catalytic Reforming, and Sulphur Recovery unit . KRPC was designed to process Nigerian crudes at the Atmospheric and Crude Distillation Unit (CDU) of its Fuels plant and imported heavy crudes at its Lubes plant. The Fuels plant of the refinery processes LPG, PMS, kerosene, and fuel oil. On the other hand, the Lubes plant, was designed to process heavy imported crude from Kuwait, Venezuela, Saudi Arabia, and Russia. It also has a capacity to produce lube-based oils, asphalts, and waxes .
However, according to Reuters , KRPC has also been under a shutdown since 2019 for a maintenance pre-inspection.
Based on these characteristics, the complexity of NNPC refineries may be classified using Gary et al.  complexity table as shown in Table 2.
Table 2 shows that the PHRC I can be classified as a simple topping/hydro-skimming refinery, while WRPC, KRPC and PHRC II were built as complex refineries with catalytic cracking capabilities. None of the NNPC refineries can be classified as very complex facilities as none is equipped with coking capabilities.