Energy experts are examining the combined effect and implication of the rising price of petrol, the removal of fuel subsidy on the cost of living, Nigeria’s economy, businesses, and everyday life.
In a conversation aired on Channels TV, Economist and energy expert Kelvin Emmanuel, along with Michael Adel, a human capacity development professional and public affairs analyst,
Addressing the situation, Emmanuel emphasised the hardship Nigerians face due to fuel price hikes. “Nigerians are literally groaning, trying to scrape off survival wherever they can find it,” he remarked, reflecting on the immediate economic pressure many are feeling. He cited the long-standing issues with crude importation, the failure of Nigeria’s refineries, and the government’s reliance on fuel imports as core factors contributing to the high cost of petrol.
Emmanuel pointed out that despite Dangote’s refinery—the seventh largest in the world—starting operations, Nigeria continues to import fuel. He asked, “Why would you keep importing PMS when there’s a refinery in Nigeria producing PMS? That’s the question we have to ask the government.”
Referring to the history of the issue, Emmanuel explained how Nigeria’s reliance on imported fuel has been exacerbated by foreign exchange shortages and bad financial decisions by past administrations. “In the last 18 years, NNPC has spent N12 trillion on turnaround maintenance for refineries that aren’t working. And currently, NNPC spends nearly 100 billion annually on welfare benefits for staff of these dead refineries.”
He also discussed the impact of international policies on Nigeria’s oil market, particularly how the U.S. has shifted away from importing crude oil, leaving Nigeria scrambling for new buyers. “In 2009, the U.S. was one of the highest importers of Nigeria’s crude oil,” the expert explained. “But after Obama’s plan to reduce dependency on volatile regimes, the U.S. became a net exporter of oil, thanks to hydraulic fracking.”
Turning to the present, Emmanuel explained that Nigeria’s importation of refined products from Europe, combined with the exchange rate volatility, has pushed up fuel prices. “The two major factors that control the price of PMS are crude oil price and exchange rate,” he said. While the price of crude oil has remained relatively stable, “the exchange rate, however, has moved,” significantly impacting the price of petrol in the country.
He noted that Nigeria has the option of “backward integration” by refining its crude locally and selling it in naira, which could help stabilise the fuel market. However, delays in fully utilising Dangote’s refinery and NNPC’s debts to fuel traders—amounting to $6.8 billion—have left the country in a precarious situation.
“The scarcity of petrol you see around Nigeria is because NNPC owes traders $6.8 billion in modified carrier agreements. It doesn’t have the crude oil or the cash to pay the loan,” Emanuel explained, calling for swift action from the government.
Adel echoed these sentiments, adding that the rising fuel prices are taking a toll on civil servants, many of whom are now facing the prospect of remote work to save on transportation costs. However, he expressed concern about the effectiveness of such a policy. “Yes, working from home would cushion the impact on workers’ pockets, but in the civil service, where they handle sensitive government documents, some tasks require hands-on presence.”
As Nigerians wait for clear policies from the government on how to navigate the ongoing fuel crisis, the conversation between these experts underscored the urgent need for reforms in the energy sector, especially in light of the global and domestic pressures shaping the country’s fuel market.
In Emanuel’s words, “Our problem is the fact that we refuse to learn from history and keep doing the same thing in the same way, expecting a different result.”
