The government’s deregulation policy, the incapacity of modular refineries to refine petrol, the lack of funding and foreign exchange problems, and the lengthy construction time for new refineries all suggested yesterday that Nigeria would continue to import Premium Motor Spirit, PMS, also known as petrol, in the short and medium term despite efforts to increase domestic capacity.

It was previously anticipated that Nigeria would be able to fulfil its domestic demand, which was predicted to be 50 million litres per day, after several refineries, including more than 20 modular facilities, were completed and the economy improved.

In many interviews with Vanguard, experts stated that deregulation—a government policy that permits operators to get their product from both domestic and foreign markets—would be the primary driver of fuel imports.

Petrocam, AY Shafa, NIPCo, A.A. Ranno, and Matrix Energy import fuel.

According to information obtained, under the present deregulation system, a large number of businesses have imported the commodity, including Matrix Energy, A. A. Ranno, NIPCo, AY Shafa, Petrocam, and significant oil marketers.
The difference in the value of the Naira to the US dollar, which was N1, 625/$ but is currently exchanging at N1, 645/$ in the official market, caused the landing cost of gasoline to increase by 4% to N956.13 per litre in October 2024 from N919.55 in September 2024, according to the transactional analysis.

At N913.12 per litre, the analysis also calculated the total direct costs, which included the product price of N887.45, freight (Lome-Lagos) of N10.37, port charges of N7.37, Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA Levy of N4.47, storage costs of N2.58 and others.

We are excited to import products from PETROAN and IPMAN.

“Deregulation encourages competition that opens up the market, allowing investors to source the product from the local or international market,” stated Mr. Joseph Ehimen, Chairman of the Lagos State chapter of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), in an interview with Vanguard yesterday. We are now considering the Dangote refinery as a source of supply, but we are willing to take advantage of any domestic or international commercial prospects.

In general, the business climate is challenging. The interest rate has increased from less than 18% to 40%. Thus, we shall keep examining the possibilities. If importation seems more advantageous, our members will be granted permission to import.

“Prior to the removal of the fuel subsidy, it cost petroleum products retail outlet owners about N7 million to buy a truck of PMS with a capacity of 45,000 litres,” stated Dr. Joseph Obele, PETROAN’s National Public Relations Officer, in an appeal to the federal government for a N100 billion bailout. The identical truck is currently for sale for N47 million. Approximately 10,000 retail store owners are now financially disabled and incapable as a result of the abrupt 500% increase.

Owners of retail outlets selling petroleum goods find it challenging to obtain funding from financial institutions due to the sector’s unpredictability, volatility, and financial turmoil.

Additionally, deregulation would allow its members to purchase fuel from both local and foreign markets, according to Chief Chinedu Ukadike, Public Relations Officer for the Independent Petroleum Marketers Association of Nigeria, or IPMAN.

Analyst: Modular refineries don’t refine fuel.

Dr. Bala Zakka, an energy expert based in Port Harcourt, stated that while the administration of former President Muhammadu Buhari authorised over 20 entrepreneurs to build modular refineries, they were not set up to refine petrol but rather diesel, kerosene, and other substances.

These include Walter Smith Refinery in Imo State, which can process 5,000 bpd, Duport Midstream in Edo State, which can refine 2,500 bpd, and the Edo Refinery and Petrochemical Company, which can refine 12,000 bpd.

Among these are the 10,000 bpd OPAC refinery in Delta State and the 11,000 bpd Aradel0 Niger Delta Petroleum Refinery.

Forex problems and a lack of capital prevent fresh investments. — Banker
But according to one investment banker who asked to remain anonymous, “African countries, particularly Nigeria, are finding it harder to secure funding for the implementation of fossil fuel projects due to the highly politicised energy transformation. Additionally, the country’s foreign exchange problems exacerbate the situation. Nevertheless, investors and prospective investors shouldn’t give up.

Demand in Nigeria continues to climb — Report
Nigeria began considering the construction of refineries in the 1950s following the commercial oil discovery in 1956, according to a Ministry of Petroleum Resources report. A refinery survey was conducted in 1959, and the first refinery was built in 1963 using the old Port Harcourt plant, which initially had a capacity of 35,000 barrels per day.

According to the article, the refinery was opened in 1965 and produced fuel oil, petrol oil, gasoline and dual-purpose kerosene for both domestic and international markets.

However, in order to fulfil demand, the government increased the refinery’s installed capacity to 60,000 bpd due to growing demand, particularly between 1967 and 1970.

The Oputa Commission of Inquiry was established by the government to propose remedies to the issue when the demand was not fulfilled.

With an initial installed capacity of 35,000 bpd each, which was later increased to 110,000 bpd for Kaduna and 125,000 bpd for Warri, it insisted that the Commission’s suggestion was what prompted the creation of both cities.

It was learnt that in order to meet domestic demand, the government turned to offshore refining of its crude oil before a group of three companies, including HGC Corporation, Marubeni Corporation, and Spie Batignolles of France, built the fourth country’s refinery in Port Harcourt in 1984.

Nigeria was able to meet its demand for a while thanks to the new refinery, which has an installed capacity of 150,000 barrels per day, increasing the capacity of the country’s four refineries to 445,000 barrels per day. Previous administrations also looked at leasing the refineries to private operators and having them operate under contract.

According to the research, the government authorised investors to build more than 20 modular refineries and petroleum refineries, including Brass Refineries Limited and Qua Petroleum Refining Limited, with no effect on local supplies.

“As a leading producing nation, Nigeria should deploy more quantity of crude to increase domestic refining while meeting local demand,” added Mazi Colman Obasi, National President of the Oil and Gas Services Providers Association of Nigeria, or OGSPAN.

Nigerians must to think about CNG and other options—11Plc
Compressed natural gas, or CNG, is one alternative that drivers, homes, and other customers should think about, according to Adetunji Oyebanji, Managing Director of 11Plc.

“Customers will make educated decisions about where to buy,” he stated. To keep clients, operators will need to enhance their safety, customer service, and precise measurement.

“Consumers should now think about using compressed natural gas, or CNG, as an alternative to petrol to power their cars. Nigeria has entered a period of intense rivalry. Things will settle down eventually, and people will make wise decisions.