On local refining and its impact on Nigeria’s economy (2)

Human engagement in five critical areas of endeavour – food security, energy, oil and gas, economy and governance – is roundly looped in a sustainable economic value chain that would assure good living standards and security for all. Solutions that sustain quality socioeconomic standards in any given system are continuously sought by management of obvious challenges that deal with each and every aspect of the above mentioned areas. Those related areas are potentially equipped with their respective strategic contents to directly promote transactional and economic interests of all stakeholders within the identified macroeconomic system. Homo sapiens, obviously, are social animals, naturally wired in life (with high intelligence) to maintain law and order in the society where conservative attitudes and behaviours generally occur under control, for the avoidance of conflicting interests or chaotic atmosphere in sustenance of life. Man’s basic needs fundamentally drive the society to engage with a constant pursuit of daily economic activities that shall translate to financial benefits at the end of every given economic cycle. This singular fact, therefore, is the basis for man’s conscientious daily efforts to secure means of livelihood, which otherwise makes any individual unproductive and literally poor in the society, once the person cannot afford the daily basic needs for maintenance of life, plus human capital development mostly obtained through capacity building in some cases (for sustainable human social improvement through educational training). In our contemporary society, the identifiable daily needs of man, which, of course, include food security, are generally powered through energy consumption. Among other alternatives, energy could be sourced from oil and gas utilisation to advance wealth creation in an economy. This is properly guided and adequately controlled through governance.   

It is heartwarming to observe that the Nigerian economy is presently tilting towards a direction that is likely to progressively provide a clear coast, with the current mode of economic traction it appears to be gathering from the downstream subsector of the petroleum industry, through the local refining of Nigeria’s crude. This is based on the changing productive landscape in the downstream petroleum sector, with the successful emergence of the Dangote Refinery and others, including the rehabilitated government owned refining facilities in the country. This is exactly what a nation, very rich in petroleum resources, is supposed to be known to be doing, through a disciplined policy, to become a refined products net exporter as well as a refined petroleum hub that needs to be globally acclaimed. 

In this light, the Lagos Chamber of Commerce and Industry (LCCI) through its president has urged the federal government to “reduce inflation by improving petrol export” by boosting crude oil refining and petrol export to meet its inflation reduction target and strengthen the naira. I may say that the impact of local refining has already started being gradually felt within the economy. The pump price of petrol (by personal observation, as empirical evidence and supporting proof) has dropped below a thousand naira per liter. It is also heartwarming that the recent consumer price index (CPI) after rebasing inflation by the Nigeria Bureau of Statistics (NBS) is showing that inflation has dropped from 34.8 percent to 24.48 percent in January 2025. 

Through domestic refining operations, Nigeria honestly needs to reassert her energy independence because the oil and gas industry has deliberately been kept in economic chokehold and in financial limbo for decades without the expected macroeconomic performance. This is because it has been manipulated to rely on imports of refined products; with the huge bleeding of the country’s foreign reserves (thus draining the nation’s wealth), its foreign exchange. With the Dangote Refinery now making waves in the industry at the global stage, all that should be expected from the hands of the regulators in the oil industry is to protect, support and encourage domestic refineries to make giant strides in the global oil market, by giving their international contemporaries (especially in Europe) unfavourable, tough and competitive marketing experiences, to strategically outwit these foreign operators; rather than adding salt to injury by frustrating the local refiners through ceaseless unrepentant import operations. Such unwholesome conduct and attitude has led to a very recent rebuttal from the NNPCL of PMS importation claims. 

For Nigeria’s economy to be rescued at this critical time, the federal government needs to put all machineries in motion towards relieving the unnecessary heavy load on our foreign reserves by completely discontinuing from refined products imports; and give the local currency a breathing space to be resuscitated from near total collapse at the foreign exchange market. This action alone, if successfully implemented, shall go a long way in cushioning the economic impact of inflation in the country. The federal government is thus urged to critically apply this, among other measures, towards improving the national economy.

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