Nigeria still a net  importer of fuel  at 54

By Anayo Korie  / Ag Energy Editor 


At 54  years of independence  , Nigeria   the largest oil producing nation  in Sub-Saharan Africa is supposed  to  have met domestic demand for all brand of fuel  while  exporting surplus to  the West African and  global markets. This is to be expected because the  derivatives  of  hydrocarbon  such as Premium Motor Spirit (PMS) ,Automotive Gasoline  (AGO), Dual Purpose Kerosene DPK) , Aviation Turbine Kerosene (ATK ), Low Pour Fuel Oil ( LPFO ), High Pour Fuel Oil( HPFO), condensate, asphalt etc    should  have added    value to  the stream of  revenue  already  earned from Crude oil and gas  exports to the global market.

Nigeria,  the largest economy in  Africa  has  the enormous potentials of diversifying her economy as regional  hub for fuel exports  but the nation  has found    herself  a net importer of refined fuel from  Latin American countries,  United States, Asia, Europe where the same exported crude  oil  is refined  and  again imported by  the Nigerian government and sold  at high prices. Today, the pump price of PMS, otherwise known as petrol is sold at N97 per litre as Nigerians have long ago absorbed the shock  when fuel price was hiked from N65 to N97 by Jonathan’s Administration in 2012 . There appears to be fuel everywhere because government is paying subsidy to oil marketers to flood the  market with fuel imported from all parts of the world.

Fuel importation over the past two decades    became a national festival in Nigeria with a population of over  167  million people, while the revenue  that should have been invested to  build on  new refineries or  develop other sectors of the economy  is depleted at an average of N625 billion  on annual basis  to fund  petrol  subsidy. The reason behind both local and foreign investors shunning  building new refineries is  due to the partial deregulation of the downstream sector by the Government and the non -passage of petroleum industry bill (PIB) by the National  Assembly which allows government rather than market forces. to  determine the scope of businesses.

However, over  N1.8 trillion was spent  on subsidy in 2013  which was a  subject of probe by the two chambers of the National Assembly. The inability of Nigerian government to invest in refineries had given rise  to monumental corruption as some oil marketers who collected huge sums  of money for fuel importation refused to fulfill the obligations they entered with government.

The building of refineries to eliminate the embarrassment of endless fuel importation was totally ignored by successive governments in the country .Nigeria’s blend of crude namely; Bonny light, Qua , EA, Forcados , Pennington, Brass, Escravos  Yoho, Bonga,Erha, Agbami,Akpo, Amenam,Okwori,Okono, Antan,Abo, Usan, which are mainly light with less  acid and sulphur, are  refiners delight, but Nigerian Governments over the years, ignored and shunned any positive move of participation in refinery investment.

Nigerian Government between 2000 and 2007 awarded 22 Approvals in Principle licenses to both local and foreign investors for the building of new refineries to supplement fuel  production coming from three  refineries in the country with a  combined capacity of 445,000 barrels . But these licenses were revoked by the Government  due to the inability of their promoters to honour  and meet the target for the projects.

But Nigeria is losing out by selling crude oil to the international market without adding value to the national purse.

The  Amakpe  Refineries, one of the projects Nigerians hope,   as one of the independent refineries that should have added value to local refining  was  revoked by Akwa Ibom State government  due to the breach of contract by its promoters resident in the United States.

However, Akwa Ibom  State government  asked the promoters to refund  the money  so far committed to the project. This negative development  has dashed the hope of the refinery seeing the light of the day.

Nigerian Government’s decision of importing fuel from   Niger Republic as from the  end of this year is a testimony of failure on the part of Nigeria in building refineries to avert endless fuel importation. , The country’s leader, President Mahamadou Issoufou, who  met with President Goodluck Jonathan  at the State House, Abuja, recently  explained that the planned export of products to Nigeria would be aimed at bringing succour to residents of Northern Nigeria, whom he said would be getting supplies of the products from Zinder Refinery in Niger Republic

Investigations revealed that the existing refineries in the country  with a combined    capacity of  445,000 barrels  located  at Kaduna, Port Harcourt, and Warri at full capacity utilization, cannot  meet the  need of domestic consumption of  PMS,  otherwise known as petrol which stands  at over 34 million  litres  daily . Nigerian National Petroleum Corporation  (NNPC),  in order to avert  scarcity of fuel and the disruption of economic activities in the country  has embarked on the massive importation of fuel with support from few major and independent oil marketers to augment short fall .

The introduction and the full implementation of  reforms  by Obasanjo regime between 2003 to 2007 only ended up  hiking the price of fuel in Nigeria . For instance, the prices of petrol, kerosene , and diesel jumped from N20, N18 and N18 respectively in 2000  to N65 ,N100 and N150 respectively at the end of 2007.The price of petrol, the fuel that  powered  over 80 percent of economic activities in the country  was not reviewed downwards even when the price of crude oil crashed form a record high of over $147  a barrel  to below $ 45 a barrel . Government still retained the price of petrol at N70  a litre.

Duncan Clarke, the Managing Director of Global Pacific Capetown of South Africa, who spoke  in Lagos  recently said Nigerian  refineries have operated at  under capacity utilization , adding that a lot of illegal bunkering or illegal fuel sale  thrives on daily basis which depletes expected  stream of revenue to the national purse.

He observed the existence of  trans-border shipping of products  as well as  method of governance that must change for Nigeria to move forward . He street the  need to build new green field refineries in Nigeria  due to  its size and  market.

Noting that the Nigerian economy is growing  at 7 percent of Gross Domestic Product, he said:

“ It does not make sense for Nigeria to export its crude to the international market while having little or nothing for its domestic refineries. There is  urgent need for Nigeria to invest in refinery projects either in its own or in partnership with stakeholders operating in this country.’’


Major oil marketers namely Mobil, Total, Oando  TexacoConoil,  Forte oil Plc . Zenon, Beco, Acorn , Honey well, Energy  Obat, SPG etc benefited from the deregulation of  the downstream sector of the oil and gas sector but failed to invest some of their profits  in the building of new refinery projects , The oil marketers smile to banks on daily basis,  declares jumbo profits  annually which runs into several billions of naira , while Nigerians are subjected to the whims and  caprices of forces of demand and supply at the international market.

The Federal Government in the past 11 years paid lip services to the idea of building new refineries , while the idea of fuel importation was embraced by the Government of the day to the detriment of  the people . The cold feet so far developed  towards the building of new refineries  was  based  on the premises that  Government all over the world is a bad manager of business enterprises. Nigerian Leaders  who were apostles of the World Bank and International Monetary Fund (IMF)    bought the idea  without giving it a second thought.

The Nigerian National Petroleum Corporation (NNPC) have indicated interest  in the building of three  new green refineries with a total capacity of 1million barrels  in three  states  of the federation, but   this plan is still in the pipeline . Meanwhile, all the multinational oil firms including Shell Nigeria, ExxonMobil, Total Agip, have all shunned investment in  refinery projects in the country.

However,  investigation  revealed  that  government’s  ownership and running of business  have worked  well in many oil producing countries, especially the cartel of Organization of Petroleum Exporting Countries (OPEC) where Nigeria is an influential member

While Nigerian Government  played  to  the gallery, swallowing World Bank doses which have impoverished the  developing  nations,  other OPEC  member states namely;  Saudi- Arabia, Libya, Iran . Kuwait, United Arab Emirate(UAE  ) ,Algeria, Qatar, Venezuela etc are busy, fast expanding their refineries both at home and abroad.      Kuwait and Libya  for instance, have offshore refineries in Europe where crude oil is shipped,  refined and sold to consumers from their fuel stations in Europe. Venezuela, another important member in South America owns over 22 refineries , eight of which are located in the United States  alone..

OPEC  member nations have  invested  over $50 billion for refineries projects . Mr Abdalla El Badri, the Secretary General of OPEC  who confirmed the matter recently  in Austria said,  the investment would balance the practice where by emphasis was shifted to the developing countries based  on the  rejection of building new refineries in Europe and America due to  environmental concern.

However, the paradigm shift where public and private partnership has been advocated for as solution to national challenge is working in the area of building new refineries. In this regard, Dangote  group of companies leading the private sector has sealed  deals with investors to build big refinery at the cost of $9billion .The President of the group AlikoDangote contributed $3.5billion and the investors pledged to provide the remaining equity,  while the Federal Government also sealed deal worth $4.5 billion for the construction of 6 modular refineries .The  Minister of Petroleum, Mrs Diezani Allison -Madueke  who confirmed the investment  said the refineries would be built in collaboration with NNPC .Each modular refinery, when completed, will refine up to 30, 000 barrels of crude oil per day and produce up to five million litres of petrol, diesel kerosene and LPFO.

The Minister of Trade and Investment, Mr Olusegu Aganga  signed on behalf of the Federal Government, while Jim Mansfield, Vice-President/Director, Vulcan Petroleum Resources limited,  and Edozie Njoku, Chairman, Petroleum Refining and Strategic Reserve Limited, signed on behalf of their companies respectively.

Jim Mansfield of Vulcan Petroleum Resources Limited, at the ceremony described  the investment  as testimony  of Nigeria being a  good place to do business

If Nigerians cannot manage these refineries when completed .  the nation  should adopt  Nigerian Liquefied Natural Gas limited  (NLNG) model that worked out in the monetization of natural gas in the country.

Nigerians workers, if  encouraged with  conducive working environment  are capable of running  these refineries  to the benefit of all the stakeholders.

Source : Independent

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