Nigeria Imported 2.3bn Liters of Fuel in the Last Three Months, Despite Production of The Refineries

Nigeria remains heavily reliant on imported Premium Motor Spirit (PMS), with 2.3 billion liters brought into the country between September 11 and December 5, 2024, despite the commencement of operations at the Dangote Refinery and the revival of the Port Harcourt Refinery, according to data from the Nigerian Ports Authority (NPA).

This continued dependence has ignited concerns about its implications for Nigeria’s already weakened naira.

The resumption of petrol production by the Dangote Refinery, with its capacity of 650,000 barrels per day, and the 60,000 bpd Port Harcourt Refinery, which recently resumed operations, was hailed as a transformative moment for Nigeria’s petroleum industry.

Stakeholders had touted these developments as antidotes to the naira’s freefall in the FX market, given that fuel importation is one of the largest drains on Nigeria’s FX reserves.

However, the NPA’s data showing substantial ongoing imports paints a contrary picture. In the past three days alone, Nigeria imported 52,000 metric tonnes of petrol through its ports in Lagos and Calabar, according to the data.

In December alone, vessels delivering tonnes of petroleum products have docked three times.

• December 3, 2024: The vessel Binta Saleh docked at Apapa Port, delivering 12,000 metric tonnes (15.864 million liters) of petrol. Managed by Blue Seas Maritime, the shipment was discharged at the Bulk Oil Plant terminal.
• December 4, 2024: The vessel Shamal arrived at Tin Can Port at midnight, delivering 20,000 metric tonnes (26.44 million liters) of petrol under the supervision of the Peak Shipping Agency at Terminal KLT Phase 3a.
• December 5, 2024: The vessel Watson is expected to dock at Calabar Port, delivering another 20,000 metric tonnes (26.44 million liters) of petrol. Managed by Kach Maritime, the shipment will be discharged at the Ecomarine Terminal.

This highlights the slow progress in transitioning to domestic production and reducing the reliance on imports, raising questions about whether the naira will see the expected relief anytime soon.

Fuel imports require significant foreign currency outlays, which further strain Nigeria’s dwindling FX reserves. With the naira trading at record lows against major currencies, any continuation of fuel importation erases the potential FX savings that the refineries’ operations are supposed to generate.

The Nigerian government and key stakeholders had presented the refineries’ operations as critical to reducing fuel imports and stabilizing the nation’s foreign exchange (FX) market. The refineries were expected to curb the outflow of scarce foreign exchange used to import PMS, providing much-needed relief to the naira, which has faced relentless devaluation in recent years.

Economic analysts and industry stakeholders have expressed concern over the situation, warning that the outflow of FX will keep the naira under pressure, and the foreign exchange benefits we were hoping to see will not materialize.

They noted that if imports continue at this scale, the economic impact of these facilities will be negligible in the short term.

These concerns are compounded by Nigeria’s deregulated petrol pricing model. The cost of imported fuel fluctuates with global oil prices and exchange rates, making imports expensive and further pressuring local pump prices.

Domestic Production Still in Transition

While the Dangote and Port Harcourt refineries have begun operations, it appears they are still ramping up to meet Nigeria’s daily PMS consumption of over 60 million liters. Initial production levels are insufficient to displace imports entirely, particularly as logistics and distribution challenges persist.

The Nigerian government has also granted marketers the freedom to purchase directly from the Dangote Refinery, ending the Nigerian National Petroleum Company Limited (NNPCL)’s monopoly as the sole off-taker of the refinery’s output. Despite these policy shifts, the full impact of domestic production on the fuel supply chain is yet to be realized.

Persistent fuel imports not only threaten the naira’s stability but also undermine the government’s broader economic agenda, which hinges on reducing FX outflows, boosting local production, and attracting investment.

Analysts warn that if imports are not curtailed soon, the refineries’ potential to stabilize the naira and improve Nigeria’s balance of trade will remain unrealized. To address these challenges, the government has been urged to urgently accelerate refinery output while addressing systemic inefficiencies in the downstream petroleum sector.

In the meantime, this development is seen as a sign of Nigeria’s challenge in transitioning to self-sufficiency. Energy experts believe that while the Dangote and Port Harcourt refineries are critical to this effort, their success will ultimately depend on how swiftly and effectively the government and stakeholders can address these lingering issues.