Nigeria’s petrol import bill hit N5.2 trillion in 2022, the highest in six years, as the quest by the country to wean itself off imported fuel drags.
Africa’s largest economy relies wholly on imports to meet its fuel needs, as its refineries have remained in disrepair for many years.
Despite the enormous amount of money spent on petrol importation, product scarcity has persisted due to distribution glitches and smuggling.
Data sourced from the National Bureau of Statistics (NBS) showed Nigeria spent a total of N5.2 trillion in 2022, N3.9 trillion in 2021, N1.9 trillion in 2020, N1.7 trillion in 2019, N2.1 trillion in 2018 and N1.7 trillion in 2017.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, described the development as shameful, saying a forensic audit was needed to unravel the controversies regarding daily petrol importation figures.
“If they want to get the proper amount in terms of volume of imported products, they should go for a forensic audit,” Yusuf said. “Let auditors check how much the Nigerian National Petroleum Company Limited is releasing into the market daily and who they give it to.”
From Q1 to Q4 last year, petrol accounted for the highest share of all imported products. The product accounted for 25.54 percent, 17.46 percent 21.18 percent and 29.06 percent in Q1, Q2, Q3 and Q4 respectively.
Muda said that the volume of petrol imported into Nigeria can either increase or decrease, depending on market demand.
Oil and gas sector experts blamed the surging petrol import bills on the oil price rally, smuggling of the product to neighbouring countries, and naira devaluation.
“Most times, the reason for the increase in the petrol importation is due to the increase in the cost of barrels of oil. If the cost of a barrel of oil increased from about $80 to $100, the refined product will also increase,” Uwaye Omijie, a petroleum production engineer at Midwestern Oil & Gas Company, Delta state.
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.
He said the cost of hiring vessels (freight cost) across international waters has increased, which 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.”
The COO said 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 added.
Last year, Timipre Sylva, minister of state for petroleum resources, said Nigeria’s desire was to end the importation of petroleum products this 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,” (2023), 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 depended 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 commencement of operation and has had to move 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.
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