Comparative data challenges NNPC’s import claims
Sopuruchi Onwuka
Market data from S&P Global Commodities at Sea have revealed that Nigeria’s petrol import in May averaged just 205,200 b/d or 32,595,000 liters in May, validating reports by The Oracle Today that the about 70 million liters regularly claimed by the Nigerian National Petroleum Company (NNPC) Limited appeared far above calculations by other players in the market.
The Oracle Today reports that the 32,595,000 liters of petrol imports mentioned in the Platts report is recorded for Nigeria against May when internal price subsidy was solidly in place and the NNPC played sole importer at the chagrin of other marketers.
The Group Chief Executive Officer of the company, Mallam Mele Kyari, had regularly contended that the nation consumed about 70 million liters of petrol, a figure the company had used in basing its subsidy claims.
Following the stupendous consumption figures, the internal subsidy claims withheld by the company had maintained a steady rise from N800 billion in 2014 to about N4.0 trillion in 2022. And the World Bank estimated in June that subsidy could reach N11 trillion or $2.6 billion in 2023 following the devaluation of the Naira.
All other market players and international trade analysts had questioned the country’s consumption figures. They also pressed the national oil company in vain to share data on import and distribution allocation figures. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has also declined several requests to confirm the import and national consumption figures claimed by the NNPC as the basis for subsidy claims.
However in a separate report on the country’s plunging fuel demand and its impact on European market arbitrage, S&P Global analysts noted that “imports of gasoline to Nigeria plummeted to 106,000 b/d (or 16,854,000 liters) in July from 205,200 b/d (or 32,595,000) in May.
In citing data from S&P Global Commodities at Sea, the analysts attributed the volume decline in May to rising petrol prices following withdrawal of fuel subsidy by the new Tinubu administration.
With the 16.854 million liters per day average import in May, the data showed that total refined product demand has fallen 41% in the period despite liberalization of the market to allow multiple importers.
Local analysts advance several factors for the falling import volumes, stressing that the main reason is transparency associated with the liberalization of the market. Until now, the NNPC had kept import figures secret, and stoutly refused calls by marketing groups in the country to provide a dashboard on supply levels to guide investments in storage and sundry distribution logistics.
Another factor falling import volumes, an official of a trading company explained, is the transition to a new government that is not overly supporting the Nigerien people with economic commodity leakages from Nigeria.
During the past administration of former President Muhammadu Buhari, there was unhindered flow of subsidized petrol to Sahel nations through the Nigeria-Niger boarder. Exposure of the unchecked flow of petrol to Niger by a field customs official had generated national controversy that led to the officer’s suspension and detention.
Of course, removal of fuel subsidy removed the basis for bogus subsidy claims that allegedly sustained exaggerated official import numbers.
What has become uncontested however is that rising retail prices and associated inflationary jumps in the economy has elevated poverty levels in the country and forced millions of middle class families to give up their vehicles.
Micro, small and medium sized businesses that fired their activities with micro electricity generators, our field observations showed, have also drastically cut their reliance of petrol fired plants in preference to cheaper options.
In Europe, refiners are feeling the demand suppression in Nigeria which has been the biggest West African market for their output in more than 40 years.
“The 91 RON FOB AR WAF discount to FOB AR gasoline cargoes was $89/mt on Aug. 10, down sharply from before the subsidy was taken away. On May 22, the spread was at a premium of $50.25/mt, but by the end of the month had fallen to a discount,” Platts reported.
