The Central Bank of Nigeria (CBN) revealed that $1.25 billion was allocated for fuel imports and related items between January and September 2024. This marks a 40% increase compared to the $891 million disbursed during the same period in 2023, despite government efforts to boost local production through the removal of subsidies and deregulation of the petroleum market.
Rising Costs of Fuel Imports
Fuel imports remain a significant consumer of Nigeria’s foreign exchange, contributing to pressures on the country’s foreign reserves and the naira’s exchange rate. The insistence of marketers on importing petrol, even with the operational Dangote refinery, has kept demand for forex in the oil sector high.
In October 2024, the government implemented a fully deregulated petroleum market, allowing refineries to sell directly to marketers. This change initially raised petrol prices to ₦1,060 per liter before competitive pricing reduced it to ₦935 per liter in December.
Monthly Forex Allocation Breakdown
Data from the CBN shows fluctuating monthly forex allocations for fuel imports:
- January: $26.55 million
- February: $161.88 million
- March: $334.47 million
- April: $106.48 million
- May: $150.45 million
- June: $36.82 million
- July: $107.10 million
- August: $132.45 million
- September: $192.71 million
This represents a cumulative $1.25 billion allocated in the first nine months of 2024.
Fuel Imports Dominate Trade Figures
The National Bureau of Statistics (NBS) reported that mineral fuels, including petrol, accounted for 35% of Nigeria’s ₦14.67 trillion total imports in Q3 2024. Nigerians spent ₦5.14 trillion on importing these fuels during the period.
In Q2 2024, petrol imports surged to a record ₦3.22 trillion, representing 25% of total imports and a 100% increase from the same period in 2023, where the figure stood at ₦1.6 trillion. Cumulatively, Nigeria’s petrol import bill reached ₦10.96 trillion in the first six months of 2024.
Challenges Facing the Petroleum Industry
The high cost of locally refined Premium Motor Spirit (PMS) is partly attributed to dollar-based charges for refining and distribution. Industry stakeholders, including the Crude Oil Refinery Owners Association of Nigeria (CORAN), have called for reforms, such as denominating jetty charges in naira instead of dollars, to reduce costs.
Eche Idoko, the Publicity Secretary of CORAN, emphasized the need for the Nigerian Maritime Administration and Safety Agency to adopt naira-based charges to ease the financial burden on refiners and marketers.
Outlook
While the government’s reforms aim to reduce dependence on imports and stabilize fuel prices, the persistent reliance on foreign exchange for petrol imports underscores the challenges facing Nigeria’s downstream oil sector. Addressing these issues will be crucial to achieving long-term energy and economic stability.
