Recent moves in the downstream oil sector highlight Nigeria’s paradox of misery amid enormous endowment. While the Nigerian National Petroleum Company Limited pledged six million barrels of crude to the Dangote Refinery by December, five other smaller domestic refiners lamented their inability to commence production. Pump prices of refined products climbed higher amid continued supply hitches. Without further delay, President Bola Tinubu should drive a programme facilitating domestic self-sufficiency in refining.
Officials, including the Minister of State for Petroleum, Heineken Lokpobiri, admitted that the failure of the NNPC to supply Dangote Refinery and five modular refineries with crude feedstock had stalled their full take-off. They blamed lower-than-expected crude production for the lapse.
The Crude Oil Refinery Owners Association of Nigeria lamented that several more refineries were also nearing completion but were stuck because of supply uncertainties.
Meanwhile, pump prices spiked, creating further apprehension for business operators and deepening Nigerians’ agony. Manufacturers said the rise in per litre price of diesel to N1,275 in Lagos, and N1,300 ex-Lagos, was further impacting on production costs and prices.
Dangote cited the failure of the NNPC to provide it with crude for missing its latest production commencement target of October. It had missed several previous targets despite its official opening in May. It gave a new date of November 30.
Nigeria’s governance practices often defy logic. With over 37 billion barrels in crude oil reserves, it is Africa’s largest. It is nevertheless the continent’s highest importer of refined petroleum products.
It has four state-owned refineries, moribund for over three decades, running losses and gulping billions of dollars through dubious turnaround maintenance contracts, yet resists the rational option of selling them.