Despite efforts to boost domestic refining, signs emerged yesterday that Nigeria will likely continue importing Premium Motor Spirit (PMS), commonly known as petrol, in the near and medium term. This reliance is due to government deregulation policies, the limitations of modular refineries to process petrol, funding constraints, foreign exchange issues, and the lengthy timeframe required to construct new refineries.
Previously, there was hope that the completion of various refineries, including over 20 modular plants, along with an improving economy, would allow Nigeria to meet its estimated daily domestic demand of 50 million liters.
In interviews with Vanguard, experts noted that deregulation—a policy that allows operators to source petrol both locally and internationally—will largely drive continued petrol imports.
It was also revealed that several companies, such as Matrix Energy, A.A Ranno, NIPCo, AY Shafa, and Petrocam, along with major oil marketers, have imported petrol under the deregulation framework. Analysis shows that the landing cost of petrol increased by 4% in October 2024, rising to N956.13 per liter from N919.55 in September, mainly due to the change in the exchange rate of the Naira, which rose from N1,625/$ to N1,645/$ in the official market.
The total direct costs, including product cost (N887.45), freight (N10.37), port charges (N7.37), NMDPRA levy (N4.47), storage cost (N2.58), and other fees, amounted to N913.12 per liter, resulting in pump prices exceeding N1,000 per liter in the local market.
Speaking to Vanguard, Joseph Ehimen, Chairman of the Lagos State chapter of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), stated: “Deregulation fosters competition by opening up the market, letting investors source products domestically or abroad. We are exploring supply options from the Dangote refinery, but are open to both local and foreign business opportunities. The business climate is challenging, with interest rates surging from below 18% to 40%. We’ll assess options, and our members will seek import licenses if necessary.”
Additionally, PETROAN’s National Public Relations Officer, Dr. Joseph Obele, requested a N100 billion bailout from the federal government, explaining, “Prior to subsidy removal, it cost about N7 million to purchase a truck of PMS (45,000 liters). Now, that same truck is priced at N47 million—a sharp 500% increase that has left around 10,000 retail outlet owners financially constrained.”
