Business

December 29, 2020

Nigeria’s petroleum imports gulp N2.2trn in 9 months

As 3 refineries remain comatose

Prince Okafor

The Federal Government spent N2.17 trillion in the first nine months of 2020 on importation of petroleum products into the country.

The petroleum products, according to the latest data obtained from the National Bureau of Statistics, NBS, consists of mineral fuels like Natural gas, oil, Bituminous coal, amongst others.

A breakdown of the nation’s spending on the importation of these products shows that a total of N1.25 trillion was spent in the first quarter of the year, Q1’20, represented by N662.2 billion, N290.6 billion and 299.8 billion in January, February and March.

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Apparently, due to the outbreak of the COVID-19 pandemic which led to a nationwide lockdown, the spendings on the importation of petroleum products declined significantly in the second quarter of the year (April to June) to N221.3 billion.

The nation’s petroleum import for Q2’20 shows an 821% decline when compared to the first quarter import statistics.

However, in the third quarter of the year, the country recorded another sharp increase in spending on petroleum products importation at N700.4 billion, at the time the government relaxed the lockdown.

Europe topped Nigeria’s highest source of the imports, as a total of N593.3 billion was spent in sourcing the products from the continent, while Asia came second with N61.4billion, followed by America N37.2 billion.

Surprisingly Nigeria also imported petrol from African countries spending a total of N8.6 billion.

Meanwhile, stakeholders across the nation have continued to lament on the state of the nation’s petroleum industry.

Available statistics show that Nigeria holds 37 billion barrels of proven oil reserves as of 2016, ranking 10th in the world and accounting for about 2.2 percent of the world’s total oil reserves of 1.65 trillion barrels.

Nigeria has proven reserves equivalent to 237.3 times its annual consumption. This means that, without Net Exports, there would be about 237 years of oil left (at current consumption levels and excluding unproven reserves).

Globally, Nigeria stood at 37th in oil consumption, accounting for about 0.4 percent of the world’s total consumption of 97 million barrels per day.

Nigeria consumes 0.10 gallons of oil per capita per day or 35 gallons per capita per year.

 

Refineries operations

Nigeria also have four refineries situated at Kaduna, Warri and two in Port Harcourt, but they are all in a series of challenges plaguing the fate of its productivity, as they have failed to produce any petroleum product in the past three years.

Despite this abundance the nation’s four refineries processed no crude and combined yield efficiency is zero percent in the first nine months of 2020.

Though industry authorities have claimed that this flat output was, due, largely to on-going rehabilitation works in the refineries, records show that the output position has been less than 10 percent of installed capacity in the last 10 years.

However, the authorities are of the view that despite the deplorable operational state attributable to the ongoing revamping of the refineries, the efforts are expected to further enhance capacity utilization once completed.

In its latest operational report, the Nigeria National Petroleum Corporation, NNPC, stated that, “The Corporation has been adopting a Merchant Plant Refineries Business Model since January 2017. The model takes cognizance of the Products Worth and Crude Costs.”

A cumulative of the combined value of output by the four refineries (at Import Parity Price), along with the operational expenses in the first eight month of 2020 amounted to an operating deficit of N74.8 billion.

This shows a decline of 28 percent when compared to the corresponding period of 2019 which recorded N104 billion.

Vanguard Public Finance gathered that there was no associated crude plus freight cost for the refineries since there was no production.

The Petroleum Product Marketing Company, PPMC, a subsidiary of NNPC, sold a total of 9.86 billion litres of petroleum products between January and August 2020.

This is a decrease of 30 percent when compared to 14.108 billion litres sold in the corresponding period of 2019.

The decrease, according to the Corporation, is as a result of low operational activities due to the outbreak of COVID-19 pandemic.

 

Fuel availability

The Department of Petroleum Resources, DPR, has assured Nigerians of petroleum products’ availability and stable fuel supply in the country at all times on the strength of its import dependency.

The DPR also cautioned oil marketers against engaging in sharp practices that are capable of distorting products supply.

The DPR stated that there is sufficient petroleum products nationwide, while it also advised petroleum products marketers against hoarding and creating artificial scarcity of the commodity.

The apex petroleum industry regulator promised to intensify its monitoring and surveillance of petroleum products outlets to ensure compliance with quality, quantity and safety of operations in line with its regulatory mandate.

It also advised consumers to report any infraction, such as under dispensing of petroleum products at any filling station to any DPR office nationwide.

The DPR restated its commitment to safety and advised consumers to observe all necessary safety protocols in the handling of petroleum products especially at this season of harmattan.

It further assured Nigerians that it would continue to initiate appropriate initiatives to enable business and create opportunities for investors and stakeholders in the oil and gas industry in Nigeria.

 

Relocation of tankfarm

In another development, the NNPC has advised against the precipitous relocation of tank farms from their current locations along Ijegun, Kirikiri areas in Lagos and other parts of the country, in order to avoid dislocation in the supply and distribution chain of petroleum products across the country.

The Corporation made the submission at a hearing by the House of Representatives’ Ad-hoc Committee on Relocation of Tank Farms in Residential Areas of Ijegun, Kirikiri.

While presenting the position of NNPC at the hearing, Group Managing Director, Mallam Mele Kyari, stated that NNPC was not averse to the relocation of petroleum products tank farms and depots sited in residential areas but would rather that it be carried out in a planned manner so as not to cause disruption in the fuel supply and distribution chain.

According to Kyari, “Tank farms and depots were a major artery for receiving and distributing imported petroleum products to all parts of the country and that their abrupt relocation could trigger a crisis not only in the downstream sector but also in the nation’s economy in general.

 

Vanguard News Nigeria