Historical evidence shows that the economic wellbeing of Nigeria is significantly tied to activities in the oil and gas subsector of the economy. Statistical data also proved this fact to be true right from the nation’s independence. Apart from the initial performance of the nation’s political founding fathers after independence in non-oil exports (majorly from the agricultural subsector; vis-a-viz the cocoa from the West, groundnut pyramids in the North, and palm oil from the East), nothing has better impacted the economic wellbeing of the country than the hydrocarbon industry and its petroleum resources exports – from upstream operations, and the recent positive side of downstream activities tied to local refining. In the upstream subsector of the petroleum industry, the sale of crude oil in the international oil market has contributed significantly to the nation’s foreign exchange earnings for decades. In the same vein, the unstable, checkered activities and performances in the downstream subsector have also contributed (positively or negatively) towards the economic growth of the country’s economy. Due to high powered, complex manipulative schemes going on with refined products deals in the downstream subsector over many decades, Nigeria’s economy became fatally destroyed from realising national growth and economic development. This obvious fact relates to the massive looting of public funds traced to the private accounts of a few politically privileged public officers running into millions and billions of dollars. This has kept the economy and the local currency, the naira, in a sorry and stupor state, till date.
The petroleum industry is so strategic and important to the economy that the influence it wields and the respect it commands is instantly felt whenever the unexpected happens. A classical example is the effect of the President’s very simple statement while making his maiden presidential address during his swearing in ceremony on 29th May 2023 that: “Fuel subsidy is gone!” This statement alone completely reset refined products’ pump pricing with PMS or petrol jumping from around N200/litre to as much as N1,350/litre; and today, it is still hovering around the N1,000/litre mark. Inflation jumped to the roof tops. The naira’s exchange rate kept crashing to very pathetic low levels. There was a time in the history of Nigeria that the naira exchanged @0.60 USD/naira, but it has shut up to about N1,700/naira today. All these macroeconomic symptoms manifested from the impact of the terrible administrative malfunctioned operation in the downstream subsector of the oil industry that has lasted for decades. The vulnerable, poor masses, very resilient, very long suffering and hard working citizens of the land keep bearing this harsh economic brunt, including hunger caused by food insecurity that resulted from the hyperinflation everywhere in the land! This represents an overview of the economic landscape of Nigeria. It is therefore an undisputed fact that the economy of this country is directly impacted by the transactional activities that go on in the oil industry; until the time that non-oil exports shall start contributing very significantly towards the nation’s foreign exchange earnings.
The continued imports of refined products, which significantly gulps huge foreign exchange on a daily basis, with excessive pressure constantly being mounted on the nation’s foreign reserves; and which has remained the lead item among the top 10 Nigeria imports (as shown in the first quarter of 2021 by the National Bureau of Statistics). This, of course, is counterproductive for the national economic efficiency of this economy; especially where there is an existing capable local alternative source for the nation’s domestic daily demands of refined products. The Dangote Refinery, for instance, has a nameplate refining capacity of 650,000 barrels per day, to process crude oil. This particular refinery is already a big player in the global hydrocarbon business with its current supply of Jet fuel to Saudi Aramco. By this singular feat of dealing with a major global oil player, why should refined products marketers continue to import refined products into the country? This economy, for sure, can not succeed, unless the right steps are taken to reverse and duly correct the ongoing operational anomaly in the oil and gas sector of the economy. The Nigerian National Petroleum Company Limited (NNPCL) is urged to do the needful. Apart from all the recognised modular refineries (both the operational and non-productive ones) — about 25 of them in the country; and the four government-owned, comatose plants with a cumulative daily operational capacity of 445,000 bpd, that have recently started being put together, the general public has also recently being put on notice that the nation’s oldest refinery in Port Harcourt and the Warri Petrochemicals Refining plant have also gone into productive operations; while the Kaduna Refinery is now up to 60 percent technically rehabilitated.
Our leaders (all organs in the petroleum industry, especially the NNPCL) please protect the local refining facilities by encouraging them with local patronage, and the needed protections, for the nation to become a truly refined products hub in the sub-region; as a net exporter of all value added products in the global hydrocarbon market. This should be the goal until such a time when the green action target of energy transition (from fossil sources to renewable) takes full effect in the economy.
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