By Salifu Faridat
The prolonged delay in rehabilitating Nigeria’s three refineries, coupled with the postponement of the operational launch of the Dangote Refinery, has exacerbated the economic challenges faced by Nigerians.
With the recent removal of petrol subsidies taking effect, the lingering uncertainty surrounding refinery repairs only adds to the worries experienced by households and businesses across the nation.
Addressing the growing concerns voiced by labor unions, President Bola Ahmed Tinubu recently pledged that the state-owned refineries would recommence operations by December.
However, despite these assurances, the Nigerian National Petroleum Company Limited (NNPCL) has persistently pushed back the anticipated completion date for refinery rehabilitation, leaving citizens in the dark regarding the actual timeline.
The Dangote Refinery, conceived to reduce import dependency, has encountered setbacks in its operational timeline.
Similarly, the Port Harcourt Refinery Company (PHRC), undergoing a $1.5 billion rehabilitation, faces obstacles on its path to production.
This uncertainty casts a shadow over fuel pricing, introducing an additional N33.3 billion to consumers’ pump prices due to freight charges. The production of locally refined products could potentially circumvent these supplementary costs.
Related Posts
The current pump price in Nigeria is shaped by various components, including the actual cost of Premium Motor Spirit (PMS), freight charges, insurance, local distribution, margins established by marketers, and fees imposed by regulatory bodies like the Nigerian Port Authority (NPA), Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA), and Nigerian Maritime Administration and Safety Agency (NIMASA).
As of July 14, the actual cost of the product stood at N529 per litre. By refining the product within the country, expenses tied to freight, insurance, NPA, NMDPRA, and NIMASA could have been evaded, potentially leading to cost savings for consumers.
Even though Nigeria’s daily PMS consumption has dwindled to about 45 million litres, freight charges of N21 per litre still amount to roughly N945,000,000, reflecting an estimated monthly total of N29.2 billion.
Moreover, the substantial sum of over $15.1 billion allocated for PMS imports into the nation underlines a considerable economic challenge. This scenario contradicts the Federal Government’s efforts to phase out subsidies.
Renowned energy expert Prof. Wunmi Iledare emphasized the importance of focusing on the potential repercussions of labor unions’ strikes, given the elevated inflation, unemployment, and borrowing rates in the economy.
He advocated for dialogue rather than resorting to strikes, which could further exacerbate the ongoing economic crisis.
Energy scholar Adeola Adenikinju underscored the imperative of operational domestic refineries in conserving foreign exchange spent on fuel imports and potentially transitioning toward fuel exports.
Adenikinju stressed the continued need for sector liberalization, the completion of existing refineries, and support for new ventures like the Dangote Refinery.
