When-will-nigeria-wipe-this-shame-of-importing-80%-of-its-needed-refined-petroleum-products?

President Muhammadu Buhari (Right) and Vice President Yemi Osibanjo (Left)
 

Senator Ovie Omo-Agege, Deputy Senate President (Right) and Ahmed Lawan Senate President (Left)
 

Femi Gbajabiamila (Speaker, House of Representatives)
 

 
WHEN WILL NIGERIA WIPE THIS SHAME OF IMPORTING 80% OF ITS NEEDED REFINED PETROLEUM PRODUCTS?  
Is it not a national tragedy and a shame of a nation that Nigeria, despite its over fifty decades of oil and gas exploration and production activities, still exports its hugely produced crude oil and natural gas at commercial quantity, and then imports ‘refined petroleum products’ at higher costs to satisfy domestic demands to the tune of 80 per cent of its needed refined petroleum products.
In a recent published interview report of the President of Petroleum Technology Association of Nigeria (PETAN), Bank Anthony Okoroafor, he revealed that “NIGERIAN REFINERIES are working below 15%, and that Nigeria’s per capita refining capacity is 0.002 bpd/capita. This is low even by Africa standards. Libya by comparism is 0.06 bpd/capita, and South Africa 0.01 bpd/capita. Nigeria is the second largest producer of oil in Africa, producing over 1.5 million barrels daily. With proven crude oil reserve estimates of about 37 billion barrels as at 2015, Nigeria boasts about 29 per cent of the continent’s crude reserves. Yet, Nigeria is also one of the largest consumers of refined products in Africa (fifth as at 2014, behind Egypt, South Africa, Algeria and Morocco) and accounts for over seven per cent of Africa’s refined products consumption. In 2015, the refined products consumption was estimated to be about 24 billion litres, and products consumed include Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Dual Purpose Kerosene (DPK) and Aviation Turbine Kerosene (ATK).
“To the detriment of national earnings, these products are majorly imported from the United States, North Western Europe and other sources. Imports currently account for over 80 per cent of Nigeria’s refined product supply, creating a huge potential for local refining. The West African market also holds significant potential as refineries such as the Société Ivoirienne de Raffinage (SIR) in Ivory Coast, SOGARA Refinery in Gabon and the Société Africaine de Raffinage (SAR) in Senegal cannot meet current demand for refined products in the region, estimated at 39 billion litres. There is an opportunity for potential uptake by neighbouring countries, if the market has Nigeria’s refined products readily available. Nigeria consumes over 17 billion litres of PMS annually. Transportation and power are the major drivers of demand for PMS in the country, and imports currently account for over 90 per cent of PMS supplied. This is likely to continue in the future. Imported PMS is primarily sourced from North Western Europe and United States. West Africa consumes over 22 billion litres of PMS annually. Imports currently account for over 90 per cent of PMS supplied to the region. For AGO, the nation consumes over three billion litres annually, and the erratic state of the country’s power sector has been the major driver of AGO demand. The power sector is currently plagued by a plethora of challenges, increasing the demand for self-generation options such as Ago-powered generators. Imports currently account for about 60 per cent of AGO supplied in the country, which West Africa consumes about 11 billion litres annually. For aviation fuel, we consume over 400 million litres annually, most of which is primarily sourced from the United States.
“In 2014, Nigeria was the second largest importer of US aviation fuel in the world. Imports account for 100 per cent of the aviation fuel supplied due to the inability of existing refineries to produce the fuel. There is a current deficiency in supply, which is likely to continue in the short term to medium term and this is primarily due to the shortage of foreign exchange and less to do with availability of the product. West Africa consumes over one billion litres of aviation fuel annually with imports currently accounting for over 80 per cent of what is supplied to the region. Ivory Coast is responsible for a significant portion of locally refined aviation fuel within the region.
“We should as a country aim to be a refined product exporter, rather than an importer of refined products. Let’s use our crude oil as an enabler for economic growth by adding value to the crude oil in terms of refining, petrochemicals”.
Truth be told, if the above statistics does not stir the hearts of well-meaning public leaders to sit up and take pragmatic steps to address and reverse the situation, we really do not know what else would. For a country that its total debt profile has risen to N24.387t, where subsidy for imported petrol stood at N10t between 2006 and 2018, and where the number of poor Nigerians stands at 91 million, while unemployment figure settles at 20.9 million, the past and present Federal Government will only be rubbing salt in the wound if the yearly losses of over N132.5b from the country’s four refineries are allowed to continue.
According to a public affairs analyst and writer, Kingsley Jeremiah, he noted that: “Everywhere in the world, particularly in oil producing countries, the business of refining crude oil is an elixir for improved economic performance, provision of jobs for a large number of people, reduction of capital flight and the building of a new set of industries, especially petrochemicals. But in the case of Nigeria, Africa’s largest oil producer, refineries are more of a drainpipe and a means through which few individuals enrich themselves, at the detriment of the masses.
“While the slogan of the Nigerian National Petroleum Corporation (NNPC), operator of the nation’s refineries is “We touch your life in many possible ways,” the operations of the refineries located in Port Harcourt, Warri and Kaduna have affected the country in so many negative ways. To be more specific, while analysis from NNPC financial records show that the corporation recorded losses in the region of N551.46b from January 2015 to December 2018, refineries top the reasons why loses were not abating. Indeed, the country’s refineries made a total loss of N132.5b in 2018 alone. That is a 39 per cent increase from the N95.09b losses it incurred in 2017. While the refineries remained dormant, BudgIT, a public finance-focused non-governmental organisation stated that the Federal Government spent about N10tn on the payment of subsidy on imported fuel between 2006 and 2018. These developments put immense pressure on the country’s foreign exchange, national reserves, standard of living, infrastructural development, as well as lead to unemployment, and import of by-products of petroleum etc.”
While we would not want to go further into the intricacies and complexities involved in this sector that has given rise to these problems, the bottom line is that Nigeria’s dependence on imported petroleum products to run its economy despite being a leading producer and exporter of crude oil in the world is shameful and unacceptable. There is the urgent need for the Government and relevant stakeholders to ensure that Africa’s biggest economy is able to refine locally instead of exporting crude and importing finished products.
Let us reiterate here that the importance of doing everything possible in ensuring that Nigeria is able to refine all of its crude oil and natural gas produce to satisfy both domestic demand and for exports, cannot be overemphasized. Aside the fact this will earn more revenue for Nigeria, it will also address all the ‘HEADACHES’ created by ‘SUBSIDY’ and ‘PRICE FLUCTUATION’ of crude oil in the international market, and will also make Nigeria less dependent on imported petroleum products. But to actualize this, it is imperative for the Federal Government and the NNPC to realize that ‘MAINTAINING’ the four refineries in the country will not be enough to guarantee that Nigerians enjoy steady supply of petroleum products. In fact, even with the four refineries working at full capacity (which is most unlikely), satisfying domestic demands will still be a struggle, not to mention having petroleum products for exports.
It was the problem of Nigeria continuing to import a bulk of its petroleum products from the global market at the expense of its scarce foreign exchange, that led to private enterprises like the Dangote Group to set out to complete its $12 billion refinery in 2019. The Dangote 650,000 barrels per day refinery Plant, according to the President of Dangote Group, Aliko Dangote, will have the capacity to flood the domestic and international market with refined products. Also, the Petro-chemical Plant will produce 780 KTPA Polypropylene, 500 KTPA of Polyethylene while the Fertiliser project will produce 3.0 million metric tonnes per annum (mmtpa) of Urea. In addition, he revealed they are also building the largest sub-sea pipeline infrastructure in any country in the world, with a length of 1,100km, to handle 3 billion SCF of gas per day. And they also plan to construct a 570 MW power plant in this complex. Gas from their gas pipeline will augment the natural domestic gas supply and they estimate that an additional 12,000MW of power generation can be added to the grid with the additional gas from their system. According to Dangote, “we will be adding value to the economy as all these projects will be creating about 4,000 direct and 145,000 indirect jobs. We will also save over $7.5billion for Nigeria annually, through import substitution and generate an additional $5.5billion per annum through exports of the refined petroleum products, fertilizer and petro-chemicals. We envisage that these projects, which would cost over $18 billion, would be completed in 2019.”
With the above example at the back of our minds, we can imagine what will happen if other major oil and gas companies come on stream with their own set up refineries, which will refine at least 50 percent of what they produce in the extractive industry.  The crude oil and natural gas refining activities will not only generate tremendous employment opportunities that will keep the restive youths in the Niger Delta region preoccupied, it will also generate a lot of revenue for the country.
The IOCs and indigenous oil and gas companies should build/have refineries (plants) beside their production facilities, to refine natural gas and crude oil for domestic use in the country and for export purposes. Besides, they will also benefit immensely from the huge profit that will be abounded by such venture. This will not only ensure the “TRANSFER OF TECHNOLOGY” on the part of IOCs, it will also make IOCs to be more involved in refining petroleum products for domestic and export purposes in the country, other than being only in the extractive industry. All of this will bring about more industrialization and increased employment opportunities for the countless idle youths on our streets. We believe the IOCs need to be more involved in the growth process of Nigeria’s economy other than focus solely on exploration and production of crude oil and natural gas for export.
However, for the above suggestion to be active and taken seriously, there is need for members of the National Assembly to enact and pass an Act, perhaps this should be included in the Petroleum Industry Bill, which will compel the said IOCs and Indigenous oil and gas companies to set up these refineries and refine at least 50 percent of whatever they produce, to satisfy domestic demands and for export purposes.
 
 
 
Zik Gbemre.
 
 

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