Energy expert Omonigho Otanocha has called on the government and petroleum product importers to convert their depots into crude storage facilities, following the Nigerian National Petroleum Company Limited’s (NNPCL) cessation of product imports and the commencement of fuel distribution by the Dangote Refinery.
Otanocha, who serves as the Chief Executive Officer of FUPRE Energy Solutions Limited at the Federal University of Petroleum Resources Effurun, made these remarks during the Business Morning segment on Channels Television’s Sunrise Daily show.
Otanocha referred to comments by business magnate Femi Otedola, who highlighted that with the Dangote Refinery’s $20 billion facility now producing petrol, aviation fuel, and diesel at a capacity of 650,000 barrels per day, Nigeria’s dependence on foreign fuel suppliers is ending. Otedola suggested that depot owners should consider dismantling their facilities and selling them as scrap while the market is favorable, emphasizing the need for adaptation in a changing industry.
In response, Otanocha suggested that instead of scrapping the depots, they could be modified to store crude oil, which would help build local capacity. He advocated for increasing production quotas to ensure that after meeting OPEC and multinational commitments, there would be sufficient crude to supply local refineries.
NNPCL’s Debt Challenge
The launch of petrol production by the Dangote Refinery comes amid the NNPCL’s acknowledgment of a substantial debt owed to petrol suppliers, which threatens the sustainability of fuel supplies. Reports indicate that a $6 billion debt has exacerbated petrol scarcity in Nigeria, an issue that has persisted since early 2024.
NNPCL has attributed supply shortages to various factors, including logistics challenges and flooding. However, in a recent statement, NNPCL spokesperson Olufemi Soneye admitted that the company’s financial strain is putting significant pressure on fuel supply sustainability.
Nigeria, Africa’s most populous country, continues to face energy challenges, with all state-owned refineries currently non-operational. The nation remains heavily reliant on imported refined petroleum products, with the NNPCL as the primary importer. Fuel queues are a common sight, and the price of petrol has tripled since the removal of subsidies in May 2023, rising from around ₦200/litre to approximately ₦800/litre, exacerbating the difficulties faced by citizens who rely on petrol for their vehicles and generators due to the country’s chronic power supply issues.
Additionally, the government’s unification of forex windows has caused the naira to plummet from ₦700 to over ₦1600 per dollar on the parallel market, leading to skyrocketing prices for food and basic commodities as Nigerians grapple with inflation.