Nigeria’s oil refining sector presents a complex paradox. While the nation boasts a combined refining capacity of 985,000 barrels per day across its three operational refineries, including the much-heralded Dangote Refinery, the reality is starkly different. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has revealed that these refineries contribute less than half of the country’s daily petrol consumption, forcing Nigeria to rely heavily on imports to meet its needs. This revelation raises critical questions about the efficiency and output of these facilities, despite claims of advanced production levels.
“Less than 50 per cent of the 50 million litres [of petrol consumed daily] is contributed by domestic refineries,” stated Ogbugo Ukoha, Executive Director, Distribution System, Storage, and Retailing Infrastructure at the NMDPRA, speaking at a press conference in Abuja. This shortfall, he explained, is bridged through imports, a practice enabled by import licenses granted by the NMDPRA under the Petroleum Industry Act (PIA) 2021. Without these imports, Nigeria would face a severe fuel shortage.
This news is particularly striking given the recent operationalization of the Dangote Refinery (650,000 bpd), alongside the rehabilitated Port Harcourt (210,000 bpd) and Warri (125,000 bpd) refineries. These developments were met with considerable optimism, fueling hopes of energy independence and an end to persistent fuel scarcity. However, the NMDPRA’s disclosure paints a different picture.
“None of the oil marketing companies, the companies that own refineries in the country for this year have imported any PMS,” Ukoha clarified. This means that while the refineries are operational, their output is insufficient, and other oil marketing companies are importing the necessary petrol to meet the demand. This situation raises concerns about the actual production capacities of these refineries and their ability to meet domestic needs.
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The NMDPRA also noted a decrease in national petrol consumption from 66 million litres per day to 50 million litres following the removal of the fuel subsidy in May 2023. While this reduction is significant, it underscores the continued reliance on imports.
This situation has significant implications. While Nigerians enjoyed a relatively scarcity-free Yuletide season, the underlying dependence on imports leaves the nation vulnerable to global price fluctuations and supply chain disruptions. The continued need for imports also represents a lost economic opportunity. A fully functional domestic refining sector could create jobs, boost local economies, and enhance Nigeria’s energy security. The current situation, however, means that a significant portion of the revenue generated from petrol sales goes towards paying for imports, rather than being reinvested in the domestic economy.
The NMDPRA assures the public that all imported petroleum products meet the required quality standards set by the Standards Organisation of Nigeria and the PIA 2021. They also cautioned against misinformation circulating on social media regarding product quality. “People who dabble within the social media space must be reminded that it is disrespectful if you imagine that Nigerians are gullible,” Ukoha stated.
Looking ahead, it is crucial for Nigeria to address the challenges hindering its domestic refining capacity. This includes investigating the reasons for the current production shortfall, optimizing refinery operations, and potentially incentivizing further investment in the sector. Only then can Nigeria truly achieve energy independence and unlock the full economic potential of its petroleum resources. I believe that a thorough and transparent review of the refining sector is necessary to ensure that these crucial assets are operating at their full potential, serving the interests of the Nigerian people.
