By Ifeoma Nwajei
Nigeria’s expenditure on importing Premium Motor Spirit (PMS), commonly known as petrol, surged to a staggering N3.22 trillion, in the second quarter of 2024.
This is the highest import bill ever recorded for a single quarter in the country’s history.
The figure, detailed in the latest foreign trade report by the National Bureau of Statistics (NBS), represents a striking 25% of the nation’s total imports for the period.
The dramatic rise in petrol import costs is underscored by a 100% increase from the previous year, when the import bill stood at N1.6 trillion for the same quarter. This sharp escalation reflects the country’s ongoing challenges in managing its petrol supply and pricing. In the first quarter of 2024 alone, the petrol import bill reached N2.6 trillion, and the cumulative total for the first half of the year climbed to N5.8 trillion.
Comparatively, the petrol import bill for the first six months of 2024 is up by 87.09% from N3.1 trillion during the same period in 2023. This significant rise can largely be attributed to soaring global crude oil prices and the depreciation of the naira. At the start of the year, the naira was trading at approximately N907 to the USD, but it has since plummeted by around 44.43%, with the current exchange rate exceeding N1,550 per USD.
Despite the volatile forex environment, which saw the naira briefly recognized as one of the world’s best-performing currencies in April 2024, the petrol import costs have continued to escalate. This increase has occurred against the backdrop of the long-anticipated commencement of operations at the $20 billion Dangote refinery in Lekki, Lagos State—a project that has faced numerous delays and operational setbacks.
The Dangote refinery’s entry into the market has not resolved the crisis, as the pricing of refined petrol from the facility has become a contentious issue. Initially, President Tinubu approved the sale of crude oil to the Dangote refinery in naira rather than USD, a move aimed at mitigating currency exchange risks. However, a dispute has arisen between the Dangote refinery and the Nigerian National Petroleum Company Limited (NNPCL) over the distribution and pricing of petrol.
Contrary to earlier media reports suggesting that the NNPC would be the sole distributor of petrol from the Dangote refinery, the NNPC has clarified that the refinery’s products will be available to all market players, including independent marketers. Ongoing discussions between the NNPCL and the Dangote refinery are focused on finalizing the pricing arrangements for petrol.
The controversy surrounding petrol pricing has been further complicated by recent increases in pump prices by the NNPCL, which have risen from over N500 per litre to N897. This adjustment is part of broader efforts to reduce the cost of petrol subsidies and address the financial pressures facing the industry.
As Nigeria grapples with multifaceted issues, the soaring import bill, experts note, accentuates the urgent need for comprehensive reforms in the petroleum sector, addressing both pricing mechanisms and currency volatility to stabilise the country’s fuel economy and reduce the burden on consumers.