Nigeria spent N958.3 billion importing Premium Motor Spirit (PMS), also known as petrol, in five months. The amount could build five 20,000-barrels-per-day mini refineries, industry experts, who argued that one of such refineries would cost government between $75 million and $250 million, said.
In naira terms, higher expenditure on petrol imports gives impression of worsening foreign exchange position for the country and emphasizes the need to activate the country’s four idle refineries, Francis Ogbimi, a Professor of Technology Management at the Obafemi Awolowo University, Ile-Ife said.
The new petrol imports, according to the National Bureau of Statistics (NBS), represents more than 120 per cent increase five months earlier and an increase of more that N80 billion within the same period last year.
Nigeria could become self-sufficient in petroleum products by building 10 more refineries, and creating learning infrastructure, as Japan did, to promote rapid competence-building growth and industrialisation, Ogbimi said.
This is despite the difficulties in sourcing funds to service the national budget.
The NBS stated that the Federal Government’s imports of PMS between January and April this year was N431.6 billion and that the country had imported about N874 billion worth of petroleum products during the same period in 2015.
NBS’ data showed that Nigeria imported about N254.6 billion worth of Automotive Gas Oil (AGO) in the same period compared to N118.7 billion products in the previous quarter.
The value of imported Household Kerosene (HKK) also increased from N20.2 billion to N25.5 billion in the current period under review.
The rising fuel imports had put additional pressure on the country’s foreign reserves and contributed to the worsening economic situation.
Government has been unable to fix the refineries, forcing the country to rely on importation for about 95 per cent of its fuel consumption needs.
Director of the Centre for Petroleum, Energy Economics and Law at the University of Ibadan, Adeola Adenikinju asked government to privatise the refineries.
He identified government’s continuous interference in commercial aspects of the downstream sector as major hinderance to the sector.
“I do not think government can wave any magic wand to make the refineries work at internationally acceptable capacity utilisation level. My preference is that the refineries should be privatised and the private sector should be encouraged to take over both the risk and returns associated with the market economy.
Adenikinju said that as a wasteful asset, petroleum should be integrated with other sectors mainly in terms of forward linkages. “Over 6,000 products are derivable from petroleum products. These can form the basis for developing petrochemical industry, fertilizer and ammonia industry, support the power sector.
“We must get our other sectors to continue to play their own roles in revenue generation and employment creation. However, the paradox is that while these sectors are contributing to value addition, they are not making proportionate contribution to government revenue and foreign exchange earnings.”
But Ogbimi argued that the so-called deregulation and privatisation policies of government are based on importing petroleum products.
“Did America become a world power by importing everything from Britain? Did Japan become the second biggest economy in the world by importing everything from Britain and America? Shallowness in reasoning has wasted the first 55 years of Nigeria’s independent life. We need to change our pattern of reasoning”, he added.