The pain of Nigeria’s inability to wean itself off imported fuel is biting deeper as the country’s petrol import bill hits N13.5 trillion in four years, official data collated by Dataphyte show.
Crude oil accounts for around 95 percent of outgoing goods trade each year, yet Africa’s largest economy and the most populous nation is dependent on imported petrol, despite never-ending rehabilitation and turnaround maintenance.
Data gleaned from the National Bureau of Statistics (NBS) showed that refined petroleum motor spirit (PMS) known as petrol worth N13.588 trillion was imported by Nigeria between 2018 and 2021. The figure also includes the second quarter of 2022.
The lowest importation was made in 2019, while on a yearly basis the highest importation was in 2021, N4.563 trillion.
Experts say the country is heading for a massive fiscal crisis as import bills and subsidies are no longer sustainable.
“Against a burgeoning petrol subsidy (estimated to cost over $9 billion in 2022 or almost 2 percent of GDP) and low oil production, the general government fiscal deficit for 2022 has been revised upwards from 5.3 to 5.8 percent of GDP,” the World Bank said in its latest Nigeria Development Update report. “Due to the petrol subsidy and low oil production, Nigeria faces a potential fiscal timebomb.”
According to the multilateral lender, with upcoming elections in February 2023, a key government challenge is addressing macroeconomic vulnerabilities when elections encourage higher spending, high inflation is pushing millions of Nigerians into poverty; and higher global interest rates deter private investment.
It said: “In 2022, as in 2021, Nigeria is not expected to benefit fiscally from higher oil prices fully. In 2021, while oil prices rose by two-thirds against the backdrop of global economic recovery from COVID-19, net oil revenues in Nigeria increased by only 4 percent, as production (including condensates) decreased from 1.83 million bpd in 2020 to 1.68 million bpd in 2021.
“This ‘decoupling’ between oil prices and related revenues happened because the Nigerian National Petroleum Corporation deducted a significant portion of the Federation’s oil revenues to pay for the petrol subsidy.”
The World Bank said the decoupling continues in 2022, driven by low oil production, a larger unit petrol subsidy, a weaker currency, and higher apparent petrol consumption than in the past.
For donkey’s years, Africa’s top oil producer relies wholly on imports to meet its fuel needs as its loss-making refineries have been shut down since 2020 for rehabilitation.
Dataphyte’s finding showed Nigeria’s quest to wean itself off imported fuel has missed at least five deadlines since conception in September 2009
“Nigeria will end the importation of petrol by the middle of next year based on expectations that its refineries would be back on stream and the Dangote Refinery would have been running,” Mele Kyari, group chief executive officer of Nigerian National Petroleum Company Limited (NNPC) said in a State House briefing last August.
The NNPC, which has been the sole importer of petrol into the country in recent years, has been bearing the subsidy cost incurred since 2016, when the government stopped the subsidy being paid to private importers.
If the country three major refineries were functional, Dataphyte’s finding showed the refineries would have refined 445,000 barrels of crude oil per day when rehabilitated. This should translate to an estimate of 649.70 million barrels from 2018 to 2021.
Dataphyte reported Nigeria has imported petroleum products worth 953 million barrels between 2015 and 2021, fixing the refinery would help generate more revenue to the government and meet the daily consumption to a reasonable extent as the daily consumption ranged from 45.263 million litres per to 96.554 million litres per day between January and August 2022.