Nigeria is facing a staggering loss of $2,000 per barrel of imported oil due to the inability to repair its failing refineries in Port Harcourt, Kaduna, and Warri. The Major Oil Marketers Association of Nigeria (MOMAN) revealed this alarming statistic, emphasizing the urgent need for action. MOMAN Chairman, Mr. Olumide Adeosun, expressed his concerns during a recent interview on Channels Television Sunrise Daily.
In 2016, the Nigerian National Petroleum Company (NNPC) introduced the Direct Sale Direct Purchase (DSDP) program, commonly known as crude swap. Under this initiative, NNPC supplies crude oil on a Free on Board (FOB) basis to a designated supplier, who in turn provides petroleum products to NNPC at a Nigerian port. The value of the supplied products is equivalent to the received crude oil.
Adeosun denounced the current situation as criminal, explaining that if a barrel of oil were sold at $71 and its full value were extracted locally, it could generate $2,000 for the country. The resolution lies in restoring the local refineries to full operation. Adeosun expressed hope for the revival of the refineries and emphasized the importance of the Dangote refinery coming online soon for the benefit of Nigerians.
He further highlighted the losses incurred through the dependence on imports, with various crude oil derivatives such as AGO, DPK, Jet A1, and LFPO being lost due to the inoperability of local refineries. Adeosun stressed the necessity for Nigeria to take decisive action to bring the refineries back into operation and halt the ongoing revenue loss.
Regarding petrol consumption and subsidies, Adeosun acknowledged that subsidized fuel from Nigeria had found its way across the borders, resulting in higher-than-expected consumption figures. This situation has contributed to the mismatch between demand and supply at petrol stations. While NNPC ensures a 30-day product backup in its reserves, marketers in the private sector must compete to meet consumer needs, fostering a healthy market environment.
Adeosun explained the factors influencing fuel prices, noting that certain costs, such as taxes, levies, and jetty expenses, are fixed. However, other variables, such as floating or index prices influenced by demand, supply, the Ukraine-Russia crisis, and the cost of vessels and foreign exchange, are beyond Nigeria’s control.
By addressing these pressing issues and revitalizing the refineries, Nigeria can minimize revenue loss, reduce dependence on imports, and create a more stable and competitive fuel market for its citizens.