As the current quest by Nigeria to wean itself off imported fuel drags on, new data show its petrol import bill has hit an all-time high of N4 trillion from January to September 2022, the highest in four years.
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.
Data sourced from the National Bureau of Statistics (NBS) showed the importation of petrol gobbled up N4 trillion from January to September, a 173 percent increase from N1.3 trillion recorded in the same period in 2020.
“In recent weeks, the numbers we have seen showed Nigeria’s petrol importation has more than doubled which is a bit worrisome considering there are no improved economic activities,” a senior executive in Nigeria’s downstream sector told BusinessDay.
A further breakdown of NBS data showed Nigeria spent a total of N1.506 trillion in the first quarter of 2022, N948 billion in the second quarter, and N1.2 trillion in the third quarter.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, described the development as shameful, saying a forensic audit is needed to unravel the controversies regarding daily PMS importation figures.
From Q1 to Q3 of 2022, petrol accounted for the highest share of all imported products. The product accounted for 25.54 percent, 17.46 percent and 21.18 percent in Q1, Q2 and Q3 respectively.
“If they want to get the proper amount in terms of volume of imported products; they should just go for a forensic audit,” Yusuf said. “Let auditors check how much NNPC releases into the market every day and whom they give it to.”
He added that the volume can either increase or decrease. depending on market demand.
A further breakdown of NBS data showed Nigeria spent a total of N1.506 trillion in Q1, N948 billion in Q2 and N1.2 trillion in Q3.
Other experts in the oil and gas sector blamed the surging petrol imports bill on the oil price rally, smuggling of petrol to neighbouring countries and naira devaluation.
For Jide Pratt, chief operating officer of Aiona and country manager of Trade Grid, the higher the cost of crude oil due to the Ukraine prices, the higher the worth of petrol imports.
Pratt said the cost of hiring vessels (freight cost) across international waters has increased and this means the associated costs are higher and so is the import exposure.
“Sadly as we all know the higher the logistic price for crude the higher the subsidy payments,” Pratt said. “The false narrative on Nigeria’s current petrol consumption needs to be addressed urgently.”
He noted that Nigeria must put structures in place to monitor petrol dispatches and delivery as well as pump sales.
“The Nigerian Midstream and Downstream Petroleum Regulatory Authority should have structures that are technologically enhanced if we really want to know what is going on,” Pratt said.
Last week, Timipre Sylva, minister of state for petroleum resources, reiterated that Nigeria wants to end the importation of petroleum products next year, as the Port Harcourt and Dangote refineries come on stream.
“We are expecting that we will be exiting the importation of petroleum products from maybe about the third quarter of next year,” Sylva said.
However, BusinessDay analysis shows that Nigeria has missed at least five deadlines to wean itself off imported fuel since conception in September 2009.
Ayodele Oni, an energy lawyer and partner at Bloomfield law firm, said ending fuel imports depends on several variables, including timely completion of the Dangote Refinery and rehabilitation of Nigeria’s existing refineries, as well as maintenance and proper function of the said refineries.
The Dangote Refinery has missed a number of deadlines for commencing operation and has had to move start dates forward from 2019 to 2023 due to the global coronavirus pandemic and other issues.
“When fuel importation ends, it is expected that fuel subsidy will be removed, considering indigenous production and slightly cheaper price of petroleum products,” said Oni.
Chinedu Onyegbula, an energy sector expert and director at Bullox Resources Limited, blamed the surge in petrol imports on smuggling and diversion measures, given the fact illegal pipeline diversion or smuggling tactics have been detected, some people have to find other ways to enrich themselves.
To curb the surge, Onyegbula suggested better use of technology to monitor and control fuel distribution from point of supply to the customer.
He also suggested enforcement of security measures to control and monitor the movement of petrol products across borders, and enforcement of penalties for distributors that hoard products or illegally distribute to unauthorised persons could also go a long way to curb these activities.
Crude oil accounts for around 95 percent of outgoing goods trade each year, yet Africa’s largest economy and the most populous nation is dependent on imported petrol, despite never-ending rehabilitation and turnaround maintenance.