$5 billion fuel import bill

Figures released by the Central Bank last week showed that over 5 billion dollars was spent on the importation of refined petroleum products in 2007. The amount covered 5.8 million tonnes of PMS better known as petrol at the cost of 4.14 billion of dollars and 1.3 million tonnes of DPK or kerosene worth 956 million dollars. The total figure represents an increase of about 10% of the money value spent on fuel importation in 2006. The figure is aside from the 279 billion Naira said to have been spent on fuel subsidy for 2007. Part of the explanation for the increase in importation of petroleum products is the drop in domestic refining capacity. Two of Nigeria’s four refineries in Kaduna and Warri were not in operation almost throughout last year because the pipeline carrying crude oil to the refineries was vandalised so many times during the period.

Like most Nigerians we feel alarmed and scandalised that the staggering figure of over 5 billion dollars was spent in just one year for the importation of refined products. It is more telling when it is realised that, according to oil industry experts, the figure is enough to set up a 200,000 barrels per day refinery from the scratch. The experts say that setting up such a refinery which could take 3-4 years should be able to provide about half of the country’s fuel needs. It is sad to note that the authorities do not appear keen on setting up new refineries thereby giving rise to increases in import of products as our epileptic refineries are providing less than half of our needs.

We call on the government to consider setting up of new refineries as the most viable way of securing Nigeria’s refined products needs. With the country’s abundant crude oil and gas reserves and its ambition to be among the top 20 countries by the year 2020, it is difficult to understand why the authorities seem to think that importation of all manner of products from rice to refined petroleum products is the way to do it. It is important to remember that there are other benefits of having local refining capacity. It is instructive to note that the once thriving textile industry in Nigeria finally succumbed to closure at the time when our local refineries became unable to provide one of their by-products, black oil, which happens to be one of the textile industry’s important input. In fact Nigeria should consider having the refining capacity to satisfy not just its local needs but also that of its West African neighbours.

Daily Trust believes that for the country to do that the authorities will need to free themselves from the powerful fuel importation lobby and consider our national interest first in this matter. It is not enough to hands off and expect private companies to be the ones to set up refineries. After all it is now several years since the first set of licences were issued yet no single refinery is anywhere near coming on stream. We are aware that it takes time for the refineries to begin production even after the decision to set them up has been taken and contracts have been signed. That is all the more reason not to waste any more time on the matter. Already all the four refineries in the country are ageing and there is need to set up new ones. That should certainly be the priority now unless we want to be importing 100 % of our local needs of refined products and spending more and more billions of dollars on something we can do and which will benefit us in more ways than one.