While briefing reporters at the State House in Abuja last Tuesday, the Group Managing Director (GCEO) of the Nigerian National Petroleum Company (NNPC) Limited, Malam Mele Kyari, said: “The combination of the production of the Dangote refinery and our ability to bring our refineries will eliminate all imports of petroleum products into this country next year. You wouldn’t see any imports into that country next year.
” It’s very useful. In fact, when we are done with our own refineries and the Dangote refinery, there are still other small initiatives that we are carrying out, small modular condensate refineries that we are building. If that happens, and we are very optimistic, you will find that this country will now be a net exporter. Indeed, it will be a hub for the export of petroleum products, and not only to the West African sub-region. It will happen. The supply flow will change by the middle of next year, it will change. You will not need to import petroleum products into this country by the middle of next year.
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As the GCEO of NNPC Ltd – a new title for a renewed role by the same person – this simply has to count as Mele Kyari’s Great Promise for Nigeria, for it is hard to imagine a more compelling statement from our government. since the self-induced affliction of imported fuel grabbed us more than three decades ago.
Very cautiously, Daily Trust welcomes this news. And very loudly we proclaim it as the next best thing to happen to the Nigerian economy and government today and in the future. The contradictions of the importation of petroleum products by Nigeria – a country that is currently the eleventh largest oil producer in the world and the first in Africa – are at the heart of so many problems with the Nigerian economy.
On the one hand, this is the main reason why the fuel subsidy scheme, an otherwise necessary government policy, has not worked for the benefit of Nigerians. The subsidy is simply the difference in cost per liter paid by the government between the actual cost of refined gasoline and the cost it sells at the pump. The importation of fuel greatly increases this difference paid by the government and distorts the accounting mechanisms to determine exactly how much fuel is imported, consumed or subsidized per day in the country, thus turning the whole subsidy scheme into a gigantic nest of fraudulent collusion between government officials. and often importers of briefcase fuel.
At the time of writing, Nigeria is expected to spend 6.34 billion naira on grant payments in 2023, just under 30% of the total 19.76 billion naira budgeted for next year, and more than half of the 11 billion naira deficit that the government must borrow to finance this budget. in the first place. If approved by the National Assembly, the proposed grant payment of tn 6.34 for 2023 will represent an increase of more than N2,000,000 over the N4 tn for the grant this year, and more than ten times the 691,586 N billion we would have spent on grants in just four years. in 2018. In other words, the importation of petroleum products is not only responsible for the ever-increasing costs of subsidy payments each year, but also directly responsible for Nigeria’s growing debts, which will reach N52 billion when the projected deficits for 2023 will be taken into account.
And yet, all these negative effects of imported fuel on our economy are just the tip of the iceberg. Since fuel imports are traded in dollars, they represent the most important cause of the deterioration of the situation of the naira and explain a large part of the inflation that is currently ravaging Nigeria. As Mr. Ganiyu Amao, then director in charge of research at the Central Bank of Nigeria (CBN), told an ad hoc committee of the House of Representatives set up to inquire into the state of the country’s four refineries. in May 2018, Nigeria spent an estimated $37 billion on gasoline imports between 2013 and 2018. Current numbers are spotty, but the trend has only gotten worse as we spent the equivalent in dollars of 688 billion naira in gasoline imports in the first quarter of 2021 alone. form of political intervention in the foreign exchange market.
In short, the growing and sometimes incalculable cost of importing petroleum products is the dragon that must be slain for the Nigerian economy to become free. This is not only the root cause of the monumental corruption associated with grant payments and an ever-lower naira; it also deprives Nigeria of all the benefits that should accrue from optimal utilization of the value chain across the petroleum sector.
That’s why Daily Trust takes Mele Kyari’s promise very seriously. The NNPC GCEO strategy of leveraging direct supply from the Dangote refinery, bringing back our four refineries and building new smaller ones by June 2023 seems plausible, and we welcome it. However, we hasten to add that this government has promised the same thing many times before. The then Minister of State for Petroleum Resources, Dr Ibe Kachikwu, promised in 2017 that the importation of fuel would end in 2019. So did the late NNPC Group Managing Director, Engr Maikanti Baru in 2018.
But although we have been here before with these promises under this same government, we still feel cautious optimism that this time Mele Kyari will deliver on his promise. If achieved, the end of fuel importation will not only provide a lifeline to our economy, but will also help the Buhari government exit the scene with a bang. It must not fail.