Following the commencement of gasoline production by the $20 billion Dangote Refinery located in Lagos, on Tuesday, the chief executive officer of the giant oil plant, Aliko Dangote has announced there will be tracking of all products from the refinery to ascertain the exact volume Nigerians consume.
This marks a new chapter for Nigeria, a country long plagued by discrepancies in its fuel consumption figures, which have been a source of controversy and suspicion.
During a press briefing held at the expansive petrochemical plant in Lagos, Dangote declared that with the refinery now operational, Nigeria is better equipped to accurately monitor and report its daily petrol consumption.
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He emphasized that the refinery’s capabilities would put an end to the pervasive issues of round-tripping and the falsification of import documentation, problems that have severely undermined the credibility of Nigeria’s reported fuel consumption statistics.
Tackling Round-Tripping and Documentation Fraud
Round-tripping, a fraudulent practice where fuel is documented as imported into Nigeria but is instead diverted elsewhere, has been a significant issue within the petroleum sector. According to Dangote, the refinery’s operations will bring much-needed transparency to the process.
“As you know, there is quite a lot of what you call round-tripping whereby people now do documentation and the fuel is not coming to Nigeria. And this is a fact,” Dangote stated.
He went on to explain that with the refinery now functioning, it would “show the true consumption of Nigeria,” providing the ability to “track every single loaded truck” and “loaded ship,” thus offering unprecedented visibility into the country’s fuel logistics.
This move by the Dangote Refinery is poised to close the chapter on the long-standing discrepancies that have clouded Nigeria’s fuel consumption data, bringing a new level of accountability to the industry.
The Impact on Foreign Exchange and Economic Stability
Beyond addressing fuel consumption discrepancies, Dangote also highlighted a significant policy initiative by the Federal Executive Council (FEC) that will see crude oil supplied to the refinery in local currency. This policy, known as the “Naira for Crude” arrangement, is expected to slash Nigeria’s demand for foreign exchange by at least 40%. The reduction in demand for U.S. dollars is expected to bring greater stability to the naira, Nigeria’s local currency, which has faced significant devaluation pressures in recent years.
“I want to personally also thank Mr. President for creating this idea of Naira for Crude and also Naira for the product. This will give a lot of stability for the Naira because you remove 40% of the demand of the dollars in the market,” Dangote said, expressing gratitude to President Bola Tinubu and his administration for the strategic move.
This policy is particularly critical in light of the economic challenges that have followed the removal of the fuel subsidy. Announced by President Tinubu during his inaugural address in May 2023, the end of the petrol subsidy led to a more than 400% increase in petrol prices, driving inflation and placing additional strain on the economy. The Naira for Crude arrangement is seen as a measure to cushion the impact of these economic shocks by reducing the country’s reliance on foreign currency.
Unraveling Nigeria’s Fuel Consumption Figures
The inconsistency in Nigeria’s petrol consumption figures has been a long-standing issue. For years, different government agencies have provided conflicting data, leading to confusion and mistrust among the public. For example, the Nigeria Extractive Industries Transparency Initiative (NEITI) reported that in 2019, Nigeria imported 20.6 billion liters of petrol, suggesting a daily consumption rate of 55 million liters. In contrast, the Nigerian National Petroleum Corporation (NNPC), the country’s main petroleum regulatory body, has offered varying figures.
In 2022, NNPC’s Group Chief Executive Officer, Mele Kyari, stated that daily consumption was at 68 million liters, while another NNPC report placed the figure as high as 74 million liters for certain periods in 2022.
These discrepancies have sparked widespread skepticism, with accusations that the figures were being manipulated. The House of Representatives Committee on Finance, for instance, accused the now-defunct Petroleum Products Pricing Regulatory Agency (PPPRA) of falsifying data, noting discrepancies between figures provided by different agencies, including the NNPC and the Nigerian Customs Service.
The situation was further complicated by reports of large-scale smuggling of petrol to neighboring countries, which some estimates suggest could be as high as 15.6 million liters per day. This figure has been doubted also, as the logistics required to smuggle such a large volume of fuel daily are daunting.
A Path Toward Transparency
The discrepancies and challenges in tracking Nigeria’s petrol consumption have been attributed to corruption and incompetence within key government agencies. Professor Pat Utomi, a renowned political economist, argued in an interview with The Punch that modern technology should make it possible for all relevant agencies to have accurate and up-to-date data on fuel consumption.
“In this time and age of cutting technology, how can agencies responsible for such information claim they do not know the actual volume of products consumed? Modern technologies have made it possible for all agencies to know and have access to such figures at the same time every day if they want to. The only problem that can be responsible for such discrepancies is corruption and incompetence,” he said.
The commencement of gasoline production at the Dangote Refinery is believed to have come with a promising solution to these long-standing issues. The refinery’s advanced tracking systems are expected to provide real-time data on fuel consumption, helping to eliminate the discrepancies that have plagued the sector. By accurately monitoring every truck and shipment, the refinery aims to establish a clear and reliable picture of Nigeria’s actual fuel usage.