Senior Advocate of Nigeria, Femi Falana, has provided a detailed explanation regarding the cancellation of the Port Harcourt Refinery sale to Bluestar Oil by late President Umaru Yar’Adua.
In his statement, Falana criticized the role played by former President Olusegun Obasanjo in the sale of public assets, alleging breaches of due process and conflicts of interest.
Background to the Controversy
The Port Harcourt Refinery, a major asset in Nigeria’s oil sector, was sold on May 17, 2007, to Bluestar Oil for $561 million.
Bluestar Oil, a consortium comprising Dangote Oil, Zenon Oil, and Transcorp, also acquired a 51% stake in Kaduna Refinery for $160 million on May 28, 2007. These transactions occurred during the final days of President Obasanjo’s administration.
Falana raised concerns about Obasanjo’s decision to personally oversee the privatization process.
According to the Privatisation and Commercialisation Act, the Vice President is the designated chairman of the National Council on Privatisation (NCP), the body responsible for managing the privatization of public enterprises.
However, Obasanjo allegedly sidelined his then-Vice President, Atiku Abubakar, and took direct control of the process.
One of the most contentious aspects of the refinery sales was the composition of Bluestar Oil. Falana pointed out that President Obasanjo had acquired substantial shares in Transcorp, one of the consortium members, through a “blind trust.” This raised questions about the integrity and fairness of the transactions.
In Falana’s words, “Before the deal, President Obasanjo had acquired large shares in Transcorp through ‘blind trust.’ Many interest groups in the country questioned the legal validity and moral propriety of the sales as they were consummated in the last days of the Obasanjo Administration.”
The sales were further criticized for their timing and execution. Many argued that the rush to finalize the deals before the administration’s exit cast doubt on their legitimacy.
The privatization faced strong opposition from two major oil industry unions—the National Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN).
Both unions alleged that the sales process lacked transparency and that the country had been shortchanged. They claimed the $561 million paid for the Port Harcourt Refinery was significantly below its actual value, estimated at $5 billion.
In response, the unions launched a four-day nationwide strike in June 2007, which nearly crippled the Nigerian economy. The strike was eventually called off after the federal government assured the unions that the deals would be investigated thoroughly.
Following the investigation, President Umaru Yar’Adua annulled the refinery sales. Falana noted that the cancellation was justified as the transactions violated the provisions of the Privatisation and Commercialisation Act.
Notably, the decision to reverse the sales was not challenged in court, which Falana described as an acknowledgment of the flawed process.
Below is full ststement by Falana
Why Sale of Port Harcout Refinery to Dangote Was Cancelled By President Ya’aradua
By Femi Falana
Under the Privatisation and Commercialisation Act, the Vice President is the chairman of the National Council on Privatisation (NCP), a body that is charged with overseeing the privatisation and commercialisation of public enterprises.
In utter breach of the Act, President Olusegun Obasanjo sidelined Vice President Atiku Abubakar and took over the privatisation of a number of public enterprises.
On May 17, 2007, President Obasanjo sold a 51% stake in the Port Harcourt refinery to Bluestar Oil for US$561 million. In another transaction that took place on May 28, 2007, President Obasanjo sold 51% shares in Kaduna Refinery to Bluestar Oil for $160 million.
Bluestar Oil was a consortium of three domestic companies, including Dangote Oil, Zenon Oil, and Transcop. Before the deal, President Obasanjo had acquired large shares in Transcorp through “blind trust.” Many interest groups in the country questioned the legal validity and moral propriety of the sales as they were consummated in the last days of the Obasanjo Administration.
The two powerful trade unions in the oil industry —the National Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) kicked against the privatisation of the two refineries on grounds of conflict of interest and lack of due process. They also alleged that the nation had been shortchanged as the shares acquired in the Port Harcourt refinery for $516 million were worth US$5 billion.
Convinced that the deals were not in the national interest, both unions proceeded on a 4-day strike that almost paralysed the Nigerian economy in June 2007. The strike was called off based on the assurance of the federal government to the effect that the deals would be fully investigated.
Upon the conclusion of the investigation by the federal government, the purported privatisation of the Port Harcourt and Kaduna refineries was cancelled by President Umaru Yar’adua. It is on record that the cancellation of the privatisation was not challenged in any court as it was carried out contrary to the letter and spirit of the Privatisation and Commercialisation Act.
The Alliance on Surviving Covid and Beyond (ASCAB) hereby calls on NUPENG and PENGASSAN to intensify their historical struggle aimed at as a counterpoise to the renewed campaign for the privatisation of the nation’s refineries.
Those who are awaiting the privatisation of the refineries
in a manner at variance with the national interest should be advised to set up their own refineries like the Dangote Group.
Femi Falana SAN,
The Chair,
Alliance on Surviving
Covid 19 and Beyond
(ASCAB).
