By Nigeria Today.
Recently, Nigerians across its major cities were thrown into a frenzy resulting from a shortage of PMS otherwise known as petrol. The fuel shortage began after the NNPC noticed that the methanol found in the recent fuel imports into Nigeria, exceeded Nigeria’s specification. Endless queues and panic became a norm as black marketers sold a litre of petrol for as high as 1000 naira.
However, NNPC assured Nigerians that the company had placed significant orders of over 2.1 billion litres of methanol-free petroleum to ensure that the long queues of petroleum end.
GarbaDeen Muhammad, the Group General Manager, group public affairs division of the NNPC LIMITED, had disclosed this in a recent statement issues at the peak of the scarcity.
According to the statement, the NNPC boss, Mele Kyari, had given the assurance while briefing the House of Representatives Committee on Petroleum (Downstream).
Yet, why does Nigeria keep importing petrol, despite having one of the world’s huge amounts of natural crude oil in abundance? Perhaps if our refineries were working optimally there would have been no incidence of importation of “methanol laden petrol”.
How do we get Nigeria’s refineries back to work? Let’s take a quick look at our refineries. Nigeria has four refineries; two in Rivers State, Port Harcourt, the Kaduna Refinery & Petrochemical Company Ltd, and the Warri Refinery & Petrochemical Company Ltd.
According to the Group Managing Director of the NNPC, Mele Kyari, the four oil refineries were shut down because they were functioning below capacity. In his words- That means you are not able to deliver crude oil to these refineries effectively to their maximum capacity.
The NNPC boss also said that NNPC is working on building a condensate refinery in order to achieve self-sufficiency in refined petroleum products. He said that the condensate refinery, which should have a total refining capacity of 200,000 barrels per day, would complement production at Dangote Refinery when it takes off and the four NNPC refineries when they have been fixed and revived. Would a condensate refinery solve Nigeria’s fuel problems? Only time may tell.
Currently, Nigeria’s dormant refineries include the Warri Refining, Kaduna Refining, and Port Harcourt Refining Company.
It might also interest you to know that Nigeria imports 90% of its gasoline and diesel, as the refineries are currently operating below capacity. Ever wondered what exactly is Nigeria’s daily Oil production and consumption?
A look at the average daily oil production in Nigeria during the third quarter of 2021 showed 1.57 million barrels, compared to the previous quarter, which showed the oil production per day experienced a decrease. Now that’s on production.
As at November 2021, petroleum consumption for Nigeria was 635 thousand barrels per day. Though Nigeria petroleum consumption fluctuated substantially in the months preceding November 2021.
Another crucial issue that continues to plague the oil industry in Nigeria is the issue of Oil Subsidy. Many have wondered on the veracity of this claim by government that is pays subsidy on fuel. Let us analyze Subsidy in few sentences.
Now, Subsidy means that a fraction of the price meant to be paid by consumers is paid by the government to ease the burden off consumers. For petrol, the argument is that the amount paid for petroleum by Nigerians is lower than international benchmarks. If subsidy is removed, for instance, it means that the international market determinants will also decide what the price of petroleum will be in the country.
Also, the removal of subsidy is expected to open up the market to more private competition even as the government may still intervene in regulating the market ‘when’ needed, due to the essential nature of petrol.
But is there any genuineness in the CLAIM OF SUBSIDY as espoused by the Nigerian government?
Now could this be why its been touted that the Dangote Refinery may be a panacea to the lingering issues surrounding the fuel shortages, and the ghost of subsidy in Nigeria?
The Chief Executive Officer of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, spared his insight, advising Nigerians not to entertain the illusion that the Dangote Refinery would guarantee them cheaper supply of refined petroleum products. He nonetheless agreed that the Refinery would improve fuel availability and supply chain.
Rewane said: “Nobody should expect that the Dangote Refinery is going to make petrol cheaper (in Nigeria). It is going to make it more available at any point in time. I doubt it whether he is going to collect his money in Naira because Dangote has costs.
“Dangote Refinery technically and theoretically is outside Nigeria as it is situated at the export processing zone. We have a deep-sea ports where the ships will take the refined products. But rather than buying from Amsterdam we will buy from Dangote and ship to Atlas Cove, Bonny and Port Harcourt.
“The saving (to Nigeria economy) is that rather than shipping a tanker from Amsterdam to Nigeria, we will be shipping it from Lekki. Another savings is because Dangote refinery is 45 percent more efficient than other refineries because of its cutting edge technology. This will further reduce the cost.”
That’s on Dangote Refinery. But again, only time will tell on how true this is capable of changing the negative tide of Nigeria’s fuel shortages.
