Home » News: Nigeria sells the Cheapest Fuel in West Africa Losing $Million daily Survey shows

News: Nigeria sells the Cheapest Fuel in West Africa Losing $Million daily Survey shows

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Daily, an estimated seven million litres of Premium Motor Spirit (PMS), better known as petrol, valued at N1, 085t is smuggled from Nigeria to neighbouring West African countries.

With daily consumption of about 52 million litres of petrol per day according to the Department of Petroleum Resources (DPR), The Guardian understands that only about 45 million litres are eventually circulated within the country while approximately seven million litres are smuggled to countries where the product is sold for higher turnover.

Neighbouring Chad sells the cheapest petrol at the equivalent of N322, and industry sources told The Guardian that using N300 per litre as the average figure, Nigeria loses N155 per litre, which translates to the N1, 085t day for seven million litres.

This comes as the Executive Secretary, Petroleum Products Pricing Regulatory Agency (PPPRA), Abdulkadir Saidu, said plans were underway by the agency to begin infrastructure audit in the downstream sector in this second half of 2019. The audit exercise, he said will attract investment into the sector.

Indications have also emerged that the Nigeria Extractive Industries Transparency Initiative (NEITI), may begin auditing how the country spends proceeds of its earnings from the sale of crude oil.

WHILE Nigeria sells a litre of petrol for N145 (40 cents), the product sells for N347 (96 cents) in both Togo and Benin Republic. It is N322 (89 cents) in Chad; N351 (97 cents) in Niger; N391 ($1.08 cents) in Cameroon; N286 (79 Cents) in Liberia/Sierra Leone; N405 ($1.12 cents) in Burkina Faso; N376 ($1.04) in Guinea, and N376 ($1.94) in Cote d’Ivoire.

Curiously, the product also goes for N360 ($1) in Ghana, N481 ($1.33) in Cape Verde and N441 ($1.22) in Mali.

Speaking on condition of anonymity, an industry expert said: “We can see that figures do not lie. How can Nigeria survive when it pays for the petroleum consumption of more than five countries? If the prevailing price of crude oil remains below $70 by the end of this year, Nigeria will slip back into recession by the end of the first quarter of 2020.”

Findings by NEITI also indicated that Nigeria spent a whopping N4t on fuel subsidy between 2006 and 2012.

The breakdown showed that the country spent N219.72b in 2006, N236b in 2007, N360.18b in 2008, N198.11b in 2009, N416.45b in 2009, N1.9t in 2011 and N690b in 2012.

NEITI is yet to release any report on recent payments for the subsidy, especially between 2015 and 2018.

The Guardian gathered in Abuja that NEITI would release a new report between the end of September and October this year, which is expected to provide fresh facts on domestic crude oil revenue utilisation and management. Even though it is not certain whether the NEITI report would include audit commodity trading, it is expected that fresh spendings on subsidy in the last five years will be revealed.

Indeed, at the last conference of the Extractive Industries Transparency Initiative (EITI), attention shifted to commodity trading (downstream sector) all in a bid to establish how resource-rich countries sell their oil, gas and mineral resources, and what they use the money for, which is where issues like domestic crude allocation and management would be revealed.

At the conference, which took place in Paris between June 18 and 19, participants applauded the EITI for shifting its focus on commodity trading.

At the event, which focused on open data and building trust, participants expressed believe that the new focus can indeed reverse the ‘resource curse’ trajectory of crude oil endowed countries that are poorer after the discovery of crude oil such as Nigeria.

To underpin the growing status of NEITI amongst the EITI compliance nations, NEITI was selected among other nations as pilot states for the commodity trading audit exercise.

Attempts to get comments from NEITI were unsuccessful, but the Convener, Women In Extractives (WIE), Faith Nwadishi stressed that fuel import would likely lead the country into another round of economic recession by the end of the first quarter of next year.

She said that the present scenario where government spends almost all of what it earned from crude oil sale on importing refined petroleum products does not bode well for the country, saying, “I think a state of emergency should be declared in the petroleum sector considering that it is the sector that is sustaining the economy.”

Data from the National Bureau of Statistics show that in 2017, Nigeria spent 60 per cent (representing about N1.9t) of its total earnings on importing refined products. In 2018, the country also spent about N2.8t on the importation of petroleum products.

Nwadishi urged President Muhammadu Buhari not to re-appoint himself as the Minister of Petroleum Resources, but should rather appoint a substantive minister to man the office. “The President should relinquish his position as Minister of Petroleum Resources because as President of the country, he is a super minister in charge of all the ministries. The brief of the minister should be to look at the lessons we have learnt over the years and see how the sector can benefit from it.”

She also said industry experts expect the Presidency to forward the Petroleum Industry Governance Bill (PIGB) back to the National Assembly for further work and eventual passage, adding that there was no need to start the whole process all over again.

Nwadishi equally expects the incoming petroleum minister to repackage the PIGB into an executive bill saying that would hasten its passage, which has been delayed for more than a decade.

While calling on the Federal Government to exit the downstream sector fully, she said the government must approach all issues at stake transparently as it navigates its way out of a regulated downstream sector.

According to the PPPRA, the comprehensive audit and survey of downstream oil and gas logistic facilities are meant to assess their state, adequacy and identify the infrastructure gap in the sector.

“The PPPRA recognises that the state of infrastructure in the downstream requires a constant assessment to ensure uninterrupted supply of products in addition to providing up to date data for operation in the sector,” the executive secretary said.

“Oil and gas processing, storage and distribution facilities, jetties downstream and pipelines, retail outlets for oil and gas (LPG) etc., will be the focus of the survey, which is equally aimed at assessing the impact of government policy and regulation on the sector’s operating environment and viability, with a view to addressing identified loopholes.”

He explained that the exercise, which will commence in the second half of 2019, is a long-awaited exercise by operators and other stakeholders and the outcome is expected to contribute to policy formulation and impact investment decision-making by investors.

The Saidu-led management of the PPPRA is championing this exercise, which is in furtherance of the reform programme of the present administration in the oil sector.

The executive secretary added that all oil and gas depot owners, marketers, retail outlets and LPG plant owners remain key stakeholders in the exercise, which has as its ultimate objective, enhancing the commercial viability of the sector and improving its level of attractiveness as investment capital destination of choice for would-be investors.

Source: guardian.ng

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