• Wednesday, December 06, 2023
businessday logo


Petrol imports double to N3.96trn in one year

Petrol imports double to N3.96trn in one year

Nigeria, Africa’s biggest oil producer, saw its petrol import bill hit an all-time high of almost N4 trillion last year, nearly double that of 2020, official data collated by BusinessDay show.

The country relies wholly on imports to meet its fuel needs as its refineries have remained in a state of disrepair for many years despite several reported repairs.
The amount spent on the importation of Premium Motor Spirit (petrol) alone in 2021 jumped by 97.01 percent to N3.96 trillion from N2.01 trillion, according to data from the National Bureau of Statistics (NBS).

The NBS data showed that petrol imports gobbled up N1.44 trillion in the fourth quarter of last year, a 37 percent increase compared to N1.05 trillion in Q3, N782.46 billion in Q2 and N687.74 billion in Q1.

Top officials of the two biggest oil marketers’ associations in Nigeria who spoke to BusinessDay blamed the surging petrol imports bill on oil price rally, smuggling of petrol to neighbouring countries and naira devaluation.

“The 97 percent increase is based on few things outside Nigeria’s control and a large chunk of things within its control,” Michael Osatuyi, national operations coordinator of the Independent Petroleum Marketers Association of Nigeria, said.

He listed higher international oil prices as being outside Nigeria’s control and smuggling and “unjustifiable petrol consumption” as within the country’s control.
The international oil benchmark, Brent crude, averaged $70.68 per barrel last year, up from $41.96 per barrel in 2020.

“Due to current economic reality, I can assure you Nigeria’s petroleum bill will increase by 70 percent next year, because of the country’s inability to curtail smuggling,” Osatuyi said.

Clement Isong, executive secretary/chief executive officer of Major Oil Marketers Association of Nigeria, attributed the 2021 increase to the improved economic activities compared to 2020 and the petrol price differential between Nigeria and its neighbouring countries.

“Nigeria is the only West African country selling petrol at one-third of the international price,” Isong told BusinessDay.

He said the Federal Government would pay more for petrol importation this year because the Nigerian National Petroleum Company (NNPC) Ltd “is currently oversupplying the market as a result of the dirty petrol saga.”

The deregulation of petrol pricing, which is contained in the Petroleum Industry Act, is yet to kick off as the Federal Government, through the NNPC, remains the sole importer of the product and continues to subsidise the pump price, which is currently fixed at N162-N165 per litre.

The Federal Government had in January proposed to extend the subsidy removal implementation period by 18 months, saying it would engage the legislature for the amendment of the PIA.
“The desire to smuggle petrol outside the country is currently very high due to price arbitrage,” Isong said.

Read also: Nigeria will use Eurobond cash to fund 2022 petrol subsidy- Minister of finance

Many stakeholders have lamented that the country’s petrol subsidy is denying the country value that could have accrued from higher oil prices.

The country is spending less money on basic education than it does importing petrol and subsidy. The cost of importing petrol last year is more than 40 times larger than the entire 2021 budget of N94.4 billion meant to pay for free universal basic education.

BusinessDay had on March 9 reported that Nigeria’s 2022 petrol subsidy looked set to outpace its budgeted oil revenue of N3.36 trillion as global oil prices are expected to remain at record highs.

“The cost of stopping smuggling is getting higher than the cost of subsidy, which is unsustainable,” Niyi Awodeyi, CEO at Subterra Energy Resources Limited, said.

NNPC’s boss, Mele Kyari, had in June last year told journalists that the country consumed 103 million litres per day in May 2021 and between 60 million and 70 million litres daily the following month.

Responding to the development, the Federal Government had mobilised some federal agencies like the Customs, the Economic and Financial Crimes Commission (EFCC), the Police, Civil Defence Corps and others, to curb the menace of fuel smuggling, but it is not clear how much progress has been made.

Smugglers are constantly devising new tactics to outsmart the system and create other routes of transporting petroleum products to neighbouring countries where they sell at higher prices.

BusinessDay reached out to EFCC’s spokesman, Wilson Uwujaren, to get an update on how its agency is curbing the current tactics smugglers are using.
“Fighting petrol smuggling involves multi-government agencies, not just EFCC alone. Reach out to NNPC for any information you are looking. They are the ones coordinating the activities,” Uwujaren said.

Several efforts to reach NNPC’s spokesman, Garba Mohammed, through calls and text messages proved abortive as at close of business on Wednesday.

“The fuel subsidy is a mess – a mess that President Buhari, who marketed himself as a mess-cleaner, has had problems with cleaning up,” said Awodeyi, adding, “We are yet to see any significant changes either in the pattern of petrol consumption or subsidy payments.”