.as petrol as importation gulps N3.3trn
The increase in receipts for the importation of petrol as well as increasing clamour for open market for petrol importation by retailers is a threat to attracting investments into the nation’s refining sector and the Nigerian economy as it could reverse the gains recorded in the value of the naira, experts have said.
Nigeria has seen an increase in receipts for the importation of petrol, despite the boost recorded in local refining activities in the country with the coming on board of the Dangote Refinery, Warri and port Harcourt refineries respectively.
Even though the Dangote Refinery began its first truck out of petrol in September 2024 and the Nigerian National Petroleum Company Limited confirmed the first truck out of petrol from the Port Harcourt Refinery in November 2024, available data from the National Bureau of Statistics showed that petrol import gulped over N3.3 trillion from October to December 2024.
This according to Energy experts, who spoke to BusinessDay, is detrimental to the Nigerian economy as well as the capacity to reverse the gains recorded in the value of the naira.
Speaking with BusinessDay, Etulan Adu, Oil and Gas analyst, said that with the onboarding of the Dangote Refinery, Port Harcourt and Warri refinery and other local refineries being functional, the assumption that Nigeria’s petrol imports would be significantly low compared to previous years and would be plausible.
According to Adu, sustaining this level of importation poses economic challenges, as it creates reliance on foreign products and exposes the economy to the impact of global oil price fluctuations.
“Despite advances in domestic refining, the increase in petrol importation into Nigeria—costing N3.3 trillion in just three months—is alarming. With the onboarding of the Dangote Refinery, Port Harcourt and Warri refinery and other local refineries being functional, the assumption that Nigeria’s petrol imports would be significantly low compared to previous years would be plausible.
“However, it seems to go the opposite direction, with increasing imports and huge cost burden on the naira due to devaluation and foreign exchange volatility. Sustaining this level of importation poses economic challenges, as it creates reliance on foreign products and exposes the economy to global oil price fluctuations,” he said.
He further explained that continuous importation of petroleum products in Nigeria is not a sustainable and friendly approach is needed to encourage the investment and development of the refining sector in the long-term.
Adu however noted that a critical factor responsible for the increase in petrol importation is the current market dynamics in terms of a quasi-deregulated sector and unclear pricing regulations which could distort the market, making imported fuel more accessible or cheaper than locally refined products.
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“With Nigerian domestic refineries, including Dangote, faced with significant challenges due to the rise of cheaper imported petroleum products. This competition may lead to financial instability and profitability issues, causing refineries to defer plant upgrades and expenditures for expansion projects.
“The domestic refining industry may also lose jobs, jeopardizing the growth and sustainability of Nigeria’s domestic refining sector. Overall, there will be lack of investor confidence and deterrence of foreign participation.
“Invariably it is pertinent for regulators, government and stakeholders to work hand in hand in the refining sector in order to spur economic growth. Finally, while domestic refining efforts are underway, significant challenges must be addressed to reduce reliance on petrol imports sustainably,” he said.
Also speaking with BusinessDay Chinedu Onyegbula, an energy expert, said that the continued importation of petrol is not sustainable and should not be encouraged. Noting the stretch of such import on Nigeria’s foreign exchange forex, he said, it portends bigger problems for the nation’s economic competitiveness.
Onyegbula stressed on the need to ascertain the destination of the imported petrol as there has not been any significant increase in domestic consumption of petrol in recent times.
According to the Nigerian Midstream Downstream Petroleum Regulatory Authority, there has been a decline in petrol consumption since the inception of the President Tinubu-led administration, driven by the removal of fuel subsidy.
Onyegbula said, “Domestic demand has not increased and there has not been any data to show that industrial, commercial, or other such activity has increased demand. In fact, with the Dangote refinery on board, our imports should have reduced. We need to assess data from NNPC to ascertain where the import is going and what value has been generated from such.
“The question needs to be answered. Are we not meeting our local refinery demand? Is the imported products better in quality and value for money for Nigeria? Is the imported products being tracked to ensure that it is utilised in the country?
“Is there anything wrong with our refined products necessitating the demand for imported products? Because, if not, the economic, social, political, and technological competitiveness value we can get for Nigeria and Nigerians will be lost.
“This importation is not sustainable and should not be. Dangote refinery capacity is enough to meet our domestic supply and to my knowledge we are not obligated to import to use to subsidise or supply other countries’ demand. The stretch on our forex is also very high and portends bigger problems for our economic competitiveness.”
Meanwhile, petrol retailers have continued in their clamour for an open market that supports petrol importation.
Billy Gillis-Harry, President of Petroleum Products Retail Outlet Owners Association (PETROAN), in a recent engagement, argued that while the Nigerian Petroleum sector is recording growth in crude production, importation of products should not be ruled out if the country must compete favourably in a fully liberalised economy where every source of petroleum product is allowed.
He advocated that while refineries are encouraged to work, importation also should be considered as one of the major sources of getting petrol.
This, he said, will drive healthy competition and guarantee that the domestic prices are not above import parity thereby ensuring the best possible affordable product with sustainability of petroleum products.
He said, “The benefits of the local refining of petroleum products are enormous, PETROAN supports the local refining of petroleum products and requests that local refineries be encouraged to continue sustained production of refined petroleum products.
“Also importation of products should no longer be ruled out because we want to be able to compete favorably in a fully liberalized economy where every source of petroleum product is allowed. So we want to advocate that refineries should work and importation also should be considered as one of our sources of getting product. This will drive healthy competition and guarantee that our domestic prices will not be above import parity thereby ensuring the best possible affordable product with sustainability of petroleum products.”
