Follow Us on Google
The Crude Oil Refinery Association of Nigeria (CORAN) has expressed true faith in the Nigerian Petroleum sector, stating that Nigeria’s downstream petroleum sector is at a defining moment, as years of structural dependence on imported petroleum products give way to a growing, though still challenged, local refining industry.
In a statement released on Monday and titled TRUE FAITH IN NIGERIA’S DOWNSTREAM: Why Local Refinery Companies Built While Importers Traded, it noted that after decades marked by subsidy distortions, heavy foreign exchange losses and limited domestic capacity, the emergence of local refinery companies investing in assets on Nigerian soil has reopened a critical national conversation raising that point about who has truly shown faith in Nigeria’s downstream sector between those who built refineries or those who traded imported fuel.
“The answer lies not in rhetoric or market positioning, but in capital behavior, risk exposure and long-term commitment. The faith in an economy is best measured by what investors are willing to build and what risks they are prepared to carry over time.” Says CORAN
The statement went further to note that local refinery companies, ranging from large-scale facilities to mid-sized and modular plants, have committed enormous capital to fixed industrial infrastructure within Nigeria.
Refining, CORAN notes, is among the most capital-intensive and risk-exposed segments of the petroleum value chain. “Investors must navigate construction and commissioning risks, uncertainties around crude oil supply, foreign exchange volatility, power and logistics constraints, evacuation challenges, regulatory inconsistency, and evolving policy frameworks.”
It emphasized that once constructed, a refinery represents effectively immobile capital that cannot be relocated, easily sold, or exited without significant losses.
“Beyond construction, refineries require continuous operational discipline, strict adherence to product specifications, environmental responsibility, host community engagement, and sustained market participation. In this sense, refining is not a trading strategy but an industrial commitment. Collectively, local refinery companies have committed tens of billions of dollars to downstream assets that only deliver value if Nigeria succeeds as a refining, industrial, and energy-secure economy,” CORAN described.
In contrast, CORAN observed that Nigeria’s downstream sector for much of the past three decades was dominated by an import-dependent trading model that had not made any progress.
“During the fuel subsidy era in particular, petroleum importation became highly lucrative, driven by price arbitrage, preferential access to foreign exchange, weak consumption verification systems and subsidy reimbursement mechanisms”.
The statement noted that multiple investigations during this period revealed that Nigeria paid for volumes of Premium Motor Spirit (PMS) far in excess of realistic domestic consumption, costing the country billions of dollars within a relatively short timeframe.
The statement by CORAN further explained that despite the scale of profits generated during this era, the expected reinvestment into refining capacity failed to materialize.
“Nigeria remained structurally dependent on imports, a situation that persists even after subsidy removal. Official data underscores this reality”.
It quoted figures from the National Bureau of Statistics, which show that Nigeria imported over 20 billion liters of PMS in 2023, only marginally lower than import volumes recorded in 2022. This, according to CORAN, indicates how deeply entrenched the import model had become within the downstream system.
CORAN said that the financial implications are even more striking, observing that trade data from the NBS, reported by Reuters, indicates that petrol imports rose to approximately ₦15.4 trillion in 2024, more than double the ₦7.5 trillion recorded in 2023.
“These figures represent massive foreign exchange outflows, resources that could have circulated within the domestic economy through refining operations, logistics, storage infrastructure, petrochemical development, and industrial employment”.
In effect, it noted, importation consumed national wealth without building enduring national capacity. CORAN also raised questions about the destination of fortunes accumulated during the importer-dominated era.
“If importation reflected genuine belief in Nigeria’s downstream potential, significant reinvestment into refining, storage, and processing infrastructure would have followed.” Instead, capital largely flowed into real estate, financial assets, and other non-productive investments, as well as upstream acquisitions such as marginal oil fields, where crude was often sold to international traders rather than refined locally.
Other News
“This pattern reflects confidence in short-cycle returns rather than commitment to long-term downstream industrialization.”
Nigeria is now confronting the consequences of two fundamentally different downstream philosophies, CORAN emphasized on the local refineries and the import reliance operators, and how both parties have helped the growth of the Nigerian economy and the petroleum sector.
“On one side are local refinery companies that believe in domestic value addition, energy security, technical capacity building and long-term economic resilience. On the other hand are import-reliant operators whose business models depend on continued access to ports, foreign exchange windows, and permissive import regimes.”
Furthermore, CORAN established that, as much as both parties are helping the development and growth of the Nigerian economy and the petroleum sector, they have different positions and perspectives
“This divergence becomes particularly visible whenever reform measures are proposed. Local refiners consistently advocate for transparent and reliable crude supply mechanisms, pricing, and foreign exchange coherence, and conditional import controls in situations where domestic refining capacity can meet demand. Importers, by contrast, tend to push for unrestricted import access even when local supply exists”.
As the umbrella body representing Nigeria’s refining industry, CORAN maintains that the country has reached a stage where policy neutrality is no longer sufficient.
According to the association, downstream development requires deliberate policy choices. It is therefore calling for guaranteed and transparent crude supply to domestic refineries through rule-based, enforceable allocation mechanisms insulated from discretion.
CORAN also advocates conditional import licensing, stressing that imports should function strictly as a balancing mechanism rather than a default option when domestic refining can meet specification and volume requirements.
Additionally, CORAN is pushing for foreign exchange and pricing alignment to ensure that local refiners are not structurally disadvantaged relative to importers who externalize industrial risk.
“This is a wake-up call for clear policy differentiation. We are stating that companies that refine and process products locally should not be treated the same as those whose activities are limited to importation. CORAN insists that these measures are not protectionist but represent standard industrial policy tools used by serious energy-producing economies worldwide,” the statement read.
CORAN also stated that the debate is not about favoring one company over another, nor is it a corporate rivalry.
“Rather, it is a national choice about the kind of downstream sector Nigeria wants to build. A country that continues to import what it has the capacity to refine remains exposed to foreign exchange shocks, supply disruptions, and fiscal instability”.
It further noted that, conversely, a country that supports its local refinery companies strengthens energy security, creates skilled employment, deepens industrial capacity, and enhances economic sovereignty.
In conclusion, CORAN argues that local refinery companies have already answered the faith question through concrete actions by building plants, installing distillation units, and locking capital into Nigeria’s soil. The importer model, historically, answered with cargoes and margins.
As Nigeria charts the future of its downstream sector, the association insists that policy must align with demonstrated commitment. In the downstream petroleum industry, faith is not defined by claims or trading volumes, but by what is built, what is sustained, and what investors are willing to risk in the national interest, CORAN said.
