Nigeria’s persistent dependence on imported petrol continues to be a significant economic challenge, despite increased domestic refining capacity. The nation’s petrol import bill reached a staggering N15.42 trillion in 2024, a more than twofold increase from N7.51 trillion in 2023. This surge in import expenditure defies expectations of reduced reliance on foreign supply following substantial investments in local refineries, including the commissioning of the Dangote Petroleum Refinery, with a capacity of 650,000 barrels per day. The data paints a clear picture of a nation struggling to translate increased refining capacity into a tangible reduction in fuel imports, raising questions about the operational efficiency and distribution networks of the local refineries.
The upward trajectory of Nigeria’s petrol import costs has been consistent over recent years. From N2.01 trillion in 2020, the bill more than doubled to N4.56 trillion in 2021 and climbed further to N7.71 trillion in 2022. A slight dip to N7.51 trillion in 2023 offered a brief respite before the dramatic surge to the unprecedented N15.42 trillion in 2024. This escalating trend underscores the urgency for effective strategies to optimize local refinery operations and strengthen the nation’s fuel distribution infrastructure. The stark contrast between growing refining potential and soaring import costs highlights a disconnect that requires immediate attention.
Despite the commencement of operations at major refineries, including the Dangote Refinery, the Port Harcourt Refining Company (PHRC), and the Warri Refining and Petrochemical Company (WRPC), oil marketers have continued to import substantial quantities of petrol. Between September 11 and December 5, 2024, a period when domestic production was expected to impact import volumes, marketers imported 2.3 billion litres of petrol. This sustained reliance on imports contradicts earlier pronouncements by some marketers indicating a shift towards domestic supply. The continued importation suggests potential bottlenecks in domestic refinery output, distribution logistics, or market dynamics that favor imported fuel.
The persistent importation of refined petroleum products, including petrol and diesel, raises concerns among independent marketers and retailers. Over a five-month period, major oil marketers imported 6.38 billion litres of these products, incurring a cost of approximately N6 trillion. This substantial expenditure adds pressure to Nigeria’s foreign exchange reserves and raises questions about the competitiveness of locally refined products. Independent marketers express concern over the dominance of imports and the financial burden it places on the nation’s economy. Their apprehension highlights the potential for market distortions and the need for policies that promote a level playing field for all stakeholders in the petroleum sector.
The Major Energies Marketers Association of Nigeria (MEMAN) offers a contrasting perspective on fuel importation. MEMAN argues that imports foster market competition and help regulate prices. They contend that the availability of imported fuel compels local refineries to maintain competitive pricing, ultimately benefiting consumers. While acknowledging the importance of local refining, MEMAN emphasizes the role of imports in ensuring price stability and market equilibrium. This perspective highlights the complexities of the fuel market and the need for a balanced approach that supports domestic production while leveraging the benefits of a competitive market.
The Nigerian government faces a complex challenge in balancing the imperative of boosting local refining capacity with the realities of a dynamic fuel market. The substantial investments in domestic refineries have yet to translate into a significant reduction in import dependence, resulting in a hefty import bill that strains the nation’s finances. While major oil marketers highlight the competitive advantages of imports, independent players express concern about the financial burden and potential market distortions. Addressing this challenge requires a comprehensive strategy that optimizes refinery operations, strengthens distribution networks, and fosters a competitive market environment that benefits both domestic producers and consumers. The future of Nigeria’s fuel sector depends on effectively navigating these competing interests and establishing a sustainable framework for fuel security.
