The Petrol Crisis Must End In 2023

The year 2022 ended with Nigerians passing through one of the worst energy crises in the history of the country. The price of premium motor spirit (PMS) otherwise called petrol, shot to its highest with a litre of the product selling for as much N500, far above the official pump price of N182, in some parts of the country. The price was not only prohibitive, the product was scarce for most of the festive season.
Being an essential commodity, the impact of the scarcity and astronomical price of the product on the economy and household finances was devastating. It caused sharp increases in transport tariffs and instigated spiral inflation in the market. Faced with the payment of school fees and other New Year expenses, the high cost of petrol ate deep into the pockets of households.
That is why stabilizing the price of petrol and making it available for use in the country, should engage the energies of the various candidates and political parties seeking election in the February and March polls. Sadly, the candidates and parties seem too absorbed in sectional and primordial politics of religion, ethnicity and geopolitics.
Ever since crude oil became the main export earner for Nigeria after the civil war in 1970, the fate of the country’s economy has been tied to the undulating swings in the prices of the commodity in the international market. And it seems to have turned out to be a curse, rather than a blessing to the economy and the citizens.
The prognosis of the petroleum industry by the late 1970s was that of prosperity as the country aimed to become a net exporter of refined petroleum products. The second Port Harcourt refinery was conceived to export refined petroleum products. But since it was commissioned in 1989, not a single drop of the product from the 150,000 barrels per day refinery had been exported, despite the huge investments in export terminals for it at Okrika and Bonny. Rather, those facilities soon became the points at which petroleum products were imported into the country.
Currently, save for the illicit artisanal crude refineries in the Niger Delta, not a single of crude oil is refined in all of the four refineries in the country. The cost on the national economy is perilous. It has eaten so deep into the foreign reserves of the country such that the naira, the national currency has continued its endless tumbles in the foreign exchange market. It is a shame that Nigeria is the only major producer of crude oil in the world that is not able refine its crude locally. The huge subsidies paid by government on imported fuel has reached a point where the country’s cash cow, the NNPC Ltd is no longer able to remit money to the Federation Account because, it has been spending its earnings from crude oil export on subsidizing imported petrol.
With very low power generation into the national grid, most of the industries and households in Nigeria depend on petrol, diesel and kerosene for energy use. And when the prices of the product keep hitting the ceiling, the industries and household suffer dearly for it. The collapse of industries and the emigration of industrial concerns and even Nigerians out of the country, can be traced to the power shortages and huge costs of sourcing petroleum products. The effect on hospitals, educational institutions, households, small businesses and the financial sectors have become very telling.
The New Year 2023 provides another opportunity for Nigeria to turn things around in the midstream and downstream petroleum sector. The general elections should be throwing up a new governing class, whose thinking must depart from the past, where importation of subsidized petroleum was the norm, and reduce importation to the barest minimum or eliminate it entirely.
The good news is that major efforts are being made to re-stream the public refineries which have been idle for a long time. Dangote Refinery in Lagos, which has the prospect of refining 650,000 barrels a day is expected to come on stream this year, as well as a few modular refineries. Resources saved from withdrawal of subsidy on imported fuel, can be utilized to invest in the improvement of the distribution networks. Revived refineries will provide jobs for thousands of idle refinery workers and more downstream jobs and investments. The availability and low prices of products refined locally will boost industrial development and create more efficiency in economic and social transactions in the country. This is one case where solving one problem can lead to total revival of the entire economy.