Unending haemorrhage

•Nigeria’s economy continues to bleed due to lack of refining capacity

A bad situation gets worse and may well get out of hand. A report emanating from the National Bureau of Statistics (NBS) on the sum the Federal Government spent on importation of premium motor spirit (PMS), also known as petrol, last year, is mind-boggling.

A whopping N2.95 trillion, about one-third of the Federal Government’s total budget is reported to have been spent on importing PMS alone. While it may amount to gross understatement that this is most unsustainable, many fear that there is no immediate solution as the bleeding increases by the day.

The NBS report shows that the cost of importation of PMS has been on the rise in the last four years. While N1.13 trillion was expended in 2015, N1.63 trillion and N1.97 trillion was spent in 2016 and 2017, respectively. And the bumper N2.95 trillion last year.

By the above progression, quantity of petrol imported also increased by about 50 per cent between 2017 and 2018. NBS’ report also reveals that petrol import alone accounts for 22.4 per cent of Nigeria’s total imports in 2018.

There is no doubt that this is indeed an astronomical and injurious leap in the nation’s import liabilities. The situation is more worrisome if we consider the fact that the Nigerian National Petroleum Corporation (NNPC) has been the sole importer of PMS in the last one year. Other marketers declined to place further orders because, as they claimed, the landing cost of the product is higher than the fixed pump price, which stands at N145 per litre.

Just as the quantity of imported PMS jumped to an all-time high, it stands to reason that there would be a converse rise in the daily consumption of petrol. Indeed, this variable has leaped up to the roof; hitting an all-time high of about 86.4 million litres per day in February, 2018. But the average year-on-year petrol consumption figures show a corresponding increment. It was about 35 million litres per barrel in 2015.

It is noteworthy that independent marketers balked on fuel importation as a result of the drastic fall in naira exchange rate and attendant shortage of foreign exchange. Increase in crude oil prices in the international market also exerted pressure on the subsidised local pump price, making it unprofitable to sell at going price.

But the problem is deeper and dates long. Nigeria’s inability to process her crude oil into petrol and over a dozen valuable petrol and petrochemical products has been a blight of the economy for about four decades. The initial refineries built, both in pre and post-independent Nigeria have become dysfunctional, if not entirely moribund. They can hardly produce enough to meet the need of a growing nation.

Each new government since the 80s has been unable to tackle this crucial matter of strategic economic importance. Attempts at turnaround maintenance have failed; efforts to attract private investors came to naught while attempts to sell off the old refining plants hit the rocks. The current administration had promised to build new plants, including a promise of green field refineries and a collocation of new ones around the old ones. It has all turned out to be mere hot air.

Successive governments have been unable to muster the will to build new refineries or get the oil multinationals to build again as they did in the distant past. There is indeed one last resort which is the massive Dangote refining and petrochemical complex in Lekki Export Free Zone, Lagos. The completion deadline has been shifted twice but it may just be achieved in two years. Though it portends to be a monopoly, there is no doubt that it would bring a huge relief to Nigeria’s economy, but it is not likely to entirely stem the bleeding occasioned by massive petroleum products imports.

If Nigeria does not refine and add value to her huge crude oil deposit, she will continue to lose huge foreign exchange revenues which could have been deployed to accelerate her development.

NNPC must wake up to its responsibilities: It is not late to draw up and pursue a plan for the comprehensive development of Nigeria’s refining and petrochemical capacities.