Nigerians expended N2.43 trillion on premium motor spirit (PMS) and automotive gas oil (AGO), popularly called petrol and diesel, in the first nine months of 2016. In this report, TELIAT SULE examines how much each geopolitical zone consumed and spent on the two crucial products.
For three consecutive quarters in 2016, the gross domestic product (GDP) contracted year-on-year. Specifically, the GDP growth rate was lower by 2.24 percent by end of September 2016. Meanwhile, due to its aggregative nature, we might not know how the ongoing recession has affected each geopolitical zone in the country. For this reason, BusinessDay Research and Intelligence Unit (BRIU) decided to examine the utilisation of the two crucial products in each geopolitical zone. Why these products?
Without them, economic and industrial activities will be at the primitive level where everyone only fends for himself. Apart from that, empirical studies have shown that industrialisation and energy consumption are positively correlated. That means that the state or geopolitical region that utilises more PMS and AGO is witnessing more economic and industrial activities. Nationwide PMS and AGO consumption The combined expenditure on PMS and AGO by end September 2016 reached N2.43 trillion,
which was 53 percent higher than N1.59 trillion spent on same products in the same period in 2015. PMS accounted for 76 percent of this expenditure. With 12.655 billion litres consumed in the nine months ended September 2016, PMS utilisation rate was lower by 690 million litres or 5 percent when compared with 13.345 billion litres consumed by all the 36 states and Abuja in the same period in 2015. A major factor that contributed to the decline in PMS utilisation was the 49 percent increase in the official pump price of the product from N97 per litre to N145 per litre. On the contrary, AGO consumption was higher by 32 percent.
AGO utilisation reached 3.10 billion litres in third quarter of 2016 compared with 2.35 billion litres same period in 2015. In other words, additional 749.15 million litres of diesel were consumed in the first nine months of 2016. Increased agricultural activities and relative return of peace to some sections of the North-Eastern Nigeria were among factors that contributed to this increase.
Boost in agricultural activities most especially crop production plays a crucial role in AGO usage as this means that more diesel will be needed by truck owners to transport the produce to different parts of the country. Crop production accounts for 91 percent of the nation’s agricultural activities. PMS utilisation across geopolitical zones Northern region.
The North Central (NC) consumed 2.55 billion litres of PMS by the end of September 2016, and that was 16 percent higher than 2.19 billion litres the seven states in that region consumed same period in 2015. By implication, the region accounted for 20 percent of the nation’s PMS usage in 2016 as against 16 percent same period in 2015.
Prices ranged from as low as N143.3 per litre to as high as N150.4 per litre in 2016 compared with N89.6 and N96.6 which were the lowest and highest prices per litre in similar period in 2015. That brought the North-Central expenditure on this product to N370.40 billion within the period in contrast to N203.86 billion same period in 2015. One of the reasons why the NC witnessed a higher PMS consumption in the first nine months of this year compared with same period in 2015 was the relative stability in price around the regulated price of N145 per litre.
Another factor is that the insurgency in the North-East has caused a lot of families to relocate to the region just as a lot of agricultural investments have gone into the area. For example, Olam Nigeria Limited recently set up a multimillion-dollar integrated rice farm and mill in Nasarawa Sate that can produce 36,000 metric tonnes of milled rice per annum. However, the other zones in the northern region recorded lower consumption of PMS during the period.
The North-East (NE) consumed 1.05 billion litres in the third quarter of 2016 as against 1.24 billion litres in same period in 2015, meaning that the NE accounted for 8 percent of the PMS nationwide usage this year as against 9 percent usage same period in 2015. This was lower than consumption in comparable period in 2015 by 15 percent The highest price per litre was N151.7 whereas the lowest price per litre was N145 across the states within this region. Compared with same period in 2015, the least price of the product was N92 per litre while N124.6 was the highest price per litre during that period.
Consumption declined owing to the renewed insurgency in the region as this further aggravated resettlement plans of the federal and state governments. PMS consumption declined in the North West (NW) by 10 percent in the third quarter of 2016. From 1.80 billion litres in September 2015, utilisation slid to 1.62 billion litres and thereby accounted for 13 percent of the product nationwide usage in 2016 as against 14 percent in 2015. Prices ranged from as low as N144.5 per litre to as high as N151.8 per litre in 2016 compared with N87 and N93.7 per litre across states in the region in September 2015. States like Zamfara, Kano and Katsina witnessed a number of attacks such as those that occurred during the Shiite procession, cattle rustlers and incessant Fulani herdsmen attacks in Southern Kaduna.
Southern region In the southern region, PMS consumption fell in the SouthSouth (SS) and South East (SE) geopolitical zones by 23 percent and 16 percent, respectively. PMS utilisation declined to 1.798 billion litres in the third quarter of 2016 compared with 2.34 billion litres same period in 2015. This means the region accounted for 14 percent of the product nationwide usage compared with 18 percent in same period in 2015. This may not be unconnected with the militant activities, kidnapping and the resultant Federal Government response which disrupted economic activities in that part of the country. PMS usage in the South East (SE) accounted for 9 percent of the nationwide usage in the third quarter of 2016 compared with 10 percent nationwide usage in 2015. This is because 1.18 billion litres of PMS were consumed in the third quarter of 2016 in contrast to 1.4 billion litres in same period in 2015. Prices ranged from as low as N144.5 per litre to as low as N148.7 per litre across the states in the region. Intermittent protests by MASSOB and IPOB, regular closure of business outfits in adherence to IPOB’s instructions as well FG’s deployment of troops to address the situation could have been responsible for this.
The South West (SW) was split into two: Lagos only and other SW states comprising Ogun, Oyo, Osun, Ondo and Ekiti. Lagos only PMS consumption in Lagos State stood at 2.32 billion litres during the period. But that was 6 percent lower than 2.48 billion litres consumed in similar period in 2015.
In effect, the state accounted for 18.3 percent of the product nationwide usage in the third quarter of 2016 as against 18.6 percent nationwide usage same period in 2015. On the average, the product per litre was N144.3, which was below the regulated price of N145 per litre. In similar period in 2015, it was N89 per litre.
The state might not have experienced much growth in PMS usage because neighbouring states are creating friendlier environment for businesses and individuals. Other South-West Rapid urbanisation in SW as seen in the number of private secondary schools, polytechnics, universities, private estate development is fast contributing to high rate of consumption of PMS in the region. The other SW states consumed 2.14 billion litres by September 2016, as against 1.889 billion litres (translating to an increase of 13 percent) over the corresponding period in 2015.
The SW sub-region accounted for 17 percent of the nationwide PMS usage by September 2016 as against 14 percent in similar period in 2015. Per litre price was relatively stable at about N144.3 per litre just as it was relatively stable at N89 per litre in the same period in 2015. AGO utilisation across geopolitical zones Nationwide AGO usage increased by 32 percent from 2.35 billion litres in 2015 to 3.1 litres in 2016.
However, this varied across the geopolitical zones. The North-Central recorded 169 percent growth in AGO consumption which rose to 276.02 million litres, from 102.53 million litres same period in 2015. The region accounted for 9 percent of the nationwide usage of the product in 2016 as against 4 percent same period in 2015.
Prices fluctuated between N196.57 and N210 per litre during the reference period as against between N162 and N205 per litre in same period in 2015. Boost in agricultural productivity was a major factor as it is a must-have for those in haulage business before they could transport agric produce to different parts of the country.
The North-West consumed 102.41 million litres which represented 200 percent rise over 34.11 million litres consumed in similar period in 2015. This means that the region accounted for 3 percent of the nationwide AGO usage by September 2016. A major factor responsible for this was increased farming activities during this period. Rice farming in Kebbi State received nationwide applause in 2016. The North-East accounted for just 1 percent of the product usage in the third quarters of both 2015 and 2016.
The region used 17.38 million litres in the third quarter of 2015 and 32.48 million litres in the third quarter of 2016, representing 1 percent in each period. Consumption in the third quarter of 2016 amounted to 87 percent increase over usage in similar period in 2015. While insurgency has not been totally defeated, a number of towns have been rescued from the control of Boko Haram insurgents. AGO consumption within the South-South economic bloc rose 10 percent to 617.03 million litres in 2016, from 558.86 million litres in the third quarter of 2015. That accounted for 20 percent nationwide usage compared with 24 percent in 2015.
This was the least growth and the factors already indentified above played a major role in this. The South East geopolitical zone witnessed 52 percent increase over its consumption in 2015, translating to 142.26 million and 93.66 million litres in the third quarter of 2016 and in the third quarter of 2015, respectively.
Regional relevance measured by the SE consumption of AGO relative to nationwide usage rose to 5 percent in 2016 as against 4 percent in same period in 2015. Lagos alone utilised 1.088 billion litres of AGO during the period under review, which was marginally above 1.087 billion litres used same period in 2015. The nation’s primate city accounted for 35.08 percent of the nationwide usage of the product in 2016 as against 46.2 percent of the nationwide usage in 2015.
This is where most of industries are located. The stagnant AGO consumption should be taken as a measure of the impact of recession on the manufacturing sector in Nigeria. The other South West states consumed 844.20 million litres in 2016 as against 459.41 million same period in 2015. The AGO utilised within this sub-region accounted for 27 percent of the nationwide usage, in contrast to 20 percent usage in 2015. Their expenditure was N160.03 billion compared with N65.43 billion by September 2015. Sources: National Bureau of Statistics (NBS), BRIU
