Nigeria's Fuel Traders Still Struggling to Access Gasoline Despite ₦11.35 Trillion Spent on Refinery Upgrades

After increasing investment of ₦11.35 trillion in refinery upgrades, currently, Nigerian fuel traders still lack any gasoline supply from the Port Harcourt and Warri refineries and remain reliant on fuel imports and the Dangote Refinery.

Despite the fact that the Nigerian government claimed previously that its state-owned Port Harcourt and Warri refineries were functional six months ago, fuel traders in Nigeria confirm they are yet to be able to receive gasoline from these facilities. Ongoing inability to access gasoline from these facilities has prolonged Nigeria's dependence on imports and put more pressure on the newly commissioned Dangote Refinery, which continues to be in the early stages of ramping up production.

Refineries Claimed To Be Operational, But No Fuel is Moving

Nigeria's government reported in late 2023 that the Port Harcourt and Warri refineries had been restarted after a decade of shutdown and extensive repairs. Those two plants, along with the Kaduna refinery, were once central to Nigeria's domestic fuel supply. But over the years, they depreciated and the nation's largest oil producer was forced to rely heavily on foreign petroleum products imports.

Half a year after they were claimed to have been overhauled, the Warri and Port Harcourt refineries have still not pumped or supplied gasoline into the market. Fuel marketers and independent retailers complained that they have not received any allocation of oil from the state-owned Nigerian National Petroleum Company (NNPC), which owns the facilities. The result is ongoing shortage of fuel in some areas of the nation and ongoing dependence on expensive imports.

Heavy Reliance on Dangote Refinery and Importation of Fuel

The Dangote Refinery, a $20 billion private sector megaproject, is currently Nigeria's strongest hope for domestic refining capacity. Although it has only recently commenced operations, the refinery is not yet at a stage to increase production and is not yet in a position to meet the country's fuel demands. It has commenced supplying diesel and aviation fuel but remains to deploy gasoline in significant quantities.

This production shortfall has caused traders and retailers to become reliant on overseas producers. Importation of refined fuel is not just costly but also subjects Nigeria to foreign exchange rate volatility as well as international oil price volatility, stoking inflation and economic instability.

**A Decade of Expenditure, But Little to Reveal

In the last decade, Nigeria has invested more than ₦11.35 trillion (about $25 billion) in efforts to refurbish its state-owned refineries. The aim was to revive local refining capacity and bring down the country's fuel import bill. Instead, corruption allegations, mismanagement, and a lack of transparency have marked the rehabilitation efforts, with minimal concrete progress achieved.

Stakeholders and experts have always questioned the rationale behind such massive spending, particularly when private entities such as Aliko Dangote have been able to build a world-class refinery from scratch within a shorter timeframe.

Economic and Social Implications

Nigeria's failure to offer locally refined gasoline has broader economic consequences. Nigeria's fuel import dependency contributes to a significant portion of its balance of payments deficit and has high fuel subsidy costs. The subsidies strain public finances and steal resources from critical sectors like health, education, and infrastructure.

In addition, recurrent fuel shortages disrupt transport, industry, and other key sectors, which in turn arrest economic growth. For common Nigerians, the failure to provide a consistent supply of fuel results in higher pump prices, there are long queues at fuel stations, and living costs are also elevated.

The Path Forward

For Nigeria to be energy-independent and economically stable, it must address the root causes of failure in its refining industry. This entails implementing higher degrees of transparency and accountability in the management of public assets, revising outdated policies, and fostering more public-private partnerships in the oil and gas sector.

The promise is in the Dangote Refinery, but a lasting solution must be buttressed by operating state-owned refineries, improved infrastructure, and strong regulatory mechanism. Short of that, the country's dream for self-sufficiency in fuel production remains an elusive dream.