11 hours Ago By Guardian Nigeria
Reports of a rising importation of petroleum products at a time Nigeria is hosting the Dangote Refinery, the largest productive refinery complex in Africa is worrisome. It is an aberration that underscores the tragedy that bedevils the country, which in turn adversely affects the economy. That Nigeria, hitherto, ranked as the world’s sixth largest oil producer/exporter, has turned to become a major importer of the same products is abhorable, indeed, dastardly.
What sort of economy is Nigeria operating. -. an economy turned on its head? Why is the oil mafia bent on destroying the economy by frustrating local production of petroleum products? Ordinarily, as a major player in the global oil industry, Nigeria ought to reap great benefits from oil like its peers in the OPEC cartel.
But this has never been the case. Recent reports indicate that Nigeria is neck deep in the importation of diverse petroleum products that can now be produced locally. Large quantities of refined petroleum products such as petrol, diesel, and kerosene are being imported from other countries.
Under normal circumstances, factors such as insufficient domestic refining capacity, increased energy demand or disruption in domestic production, leading to a greater dependence on foreign sources to meet its energy needs force countries to embark on importation of petroleum products. But many of these factors don’t apply to Nigeria at the moment. So, why the craze in petroleum products importation? The NNPCL is the sole importer of fuel in Nigeria.
Before now, the daily demand for petrol, which is about 66 million litres was not met as the four refineries located in Port Harcourt, Warri and Kaduna produced below capacity. That was before the coming on stream of the Dangote Refinery. Nigeria had to depend on imports to meet its daily demand for petrol.
But the situation has changed. According to 2021 figures, Nigeria’s top import trading partners are China (22.3%), Netherlands (9.
4%), India (8.2%), Belgium (7.1%), USA (5.
9%), and Russia (3.8%). Others are South Korea (2.
5‰), Norway (2.2%), Germany (2.1%) and France (2%).
The main importers are Pinnacle Oil and Gas Limited, Techno Oil and Nigerian Independent Petroleum Company (NIPCO). As it were, Nigeria is the largest importer of oil in Africa, amounting to 1,008,852 (TJ). The value of Nigeria’s purchase of imported mineral fuel, including petroleum, is the fastest-growing of the 10 import categories amounting 47.
2%. Refined petroleum imports account for $20.7 billion.
In 2023, mineral fuels, oil, distillation products accounted for $21.75 billion. These figures do not paint a good picture of Nigeria as a major oil producing nation.
So, why is Nigeria in this ugly situation to be an import dependent, especially, for petroleum products? Are the responsible factors applicable to Nigeria? For instance, increased demand for petroleum, is there increased demand for energy in Nigeria, especially,, for transportation? The answer is no. Economic growth is one of the biggest factors affecting petroleum products demand. What is the status of the economy in Nigeria? Is the economy growing or shrinking? While the economy cannot be said to be static, Nigeria’s economy can be said to be growing at a slower rate.
In the third quarter of 2024, the GDP reportedly grew by 3.46%, which is higher than the previous quarters. But some analysts predict that growth will slow in 2025, which does not match the current increased importation of energy products.
As it were, the poor state of the economy does not justify the increased fuel importation. Rising crude oil prices: Crude oil prices are determined by global supply and demand. Economic growth is one important factor that affects petroleum products demand.
How does the slow-growing Nigerian economy induce more demand for petroleum products? It is paradoxical. That does not make any sense. The rising importation is not tied to economic growth.
It is, therefore, artificial. Stock build-up: Reports indicate that in 2022, the European Union stocked up on crude oil and petroleum to compensate for the large amount used in 2021. The stock build-up peaked at 8.
3 million tonnes. It is not clear how this development would contribute to increased petroleum importation in Nigeria. Changes in import origin: Like the preceding factor, the European Union reportedly implemented what is called RepowerEU, a plan designed to reduce its dependency on Russian fossil fuels.
Again, it is not clear how a distant issue like this would contribute to increased petroleum products imports. It is worrisome that outside of the European Union, Nigeria stands as the only country importing petroleum products to meet its domestic demands. In 2020, Nigeria was the world’s 17th largest importer of refined petroleum.
The reason is obvious. Over the past 30 years, Nigeria’s crude oil refining capacity had declined, leading to a massive dependence on imported refined petroleum products from the European Union and other countries. The collapse of the four public refineries was at the root of the problem.
That was prior to the launch of the Dangote Petrochemical Refinery at Lekki in Lagos. The Dangote Refinery is a 650,000 barrels per day (BPD) integrated refinery project designed to bridge the gap in the domestic petroleum refining shortfall. Built by the versatile and shrewed business tycoon and industrialist, Aliko Dangote, Africa’s richest man, the refinery is the 7th largest oil refining facility in the world going by 2023 ranking.
With a networth of $28 billion, the overriding aim of the refinery is to bridge the gap and halt the excessive importation of of petrol that has remained Nigeria’s albatross. Being a major crude oil producer, the aim is to utilise the crude oil stock in Nigeria to boost its production. Thus, the refinery was built to take crude through its two SPMs located 25 km from the shore and to discharge petroleum products through three separate SPMs.
Additionally, the refinery has the capacity to load 2,900 trucks daily at its loading gantries. The 650,000 barrels daily processing capacity corresponds with 50,000,000 litres of EuroV quality gasoline and 17,000,000 litres of diesel daily. There is also aviation fuel and plastic products.
With a capacity to produce more than the total output of Nigeria’s four existing refineries, the Dangote Refinery is able to meet up with Nigeria’s entire domestic fuel demand as well as export refined products, thereby closing the decades of shortfall in fuel availability. Given the current situation with the coming on stream of the Dangote Refinery, which is now producing diesel, kerosene and petrol, the question is why are these products still being imported? As at December 2024, fuel imports reportedly hit 2.3 billion litres despite impressive local production.
Some claim that price is the reason. But there is no reason why imported petrol should be cheaper than locally produced one except it is adulterated. As things stand, the future is bright with the launch of the Dangote Refinery.
The massive importation of petroleum products, which is borne out of greed and sabotage, can be curbed. All that is needed is for the country to ensure that crude oil is supplied to Dangote and other local refineries to produce at full capacity, on the one hand. On the other hand, the four existing public refineries should be revamped and made to be productive.
Once these facilities are functional, the dependence of the country on imported petroleum products will cease..
