Nigeria, blessed with abundant oil and gas resources, has long struggled with its reliance on imported petroleum products due to limited refining capacity. In a recent nationwide address, President Bola Tinubu shed light on the staggering cost of this dependence, revealing that the country spends a staggering N2 trillion monthly to import petrol and diesel.
Tinubu stated that upon taking office, his administration inherited a nation heavily dependent on oil-based petrol, while neglecting its vast gas resources that could power the economy. The President immediately took action, removing fuel subsidies on his first day in office, leading to a significant increase in pump prices, from around N200 per litre in May 2023 to the current rate of approximately N700.
To address this pressing issue, Tinubu has unveiled the Compressed Natural Gas (CNG) Initiative, which aims to revolutionise the transportation sector and drive down costs. By distributing one million conversion kits to commercial vehicle owners, who account for 80% of imported fuel consumption, the administration hopes to reduce transportation costs by up to 60% and curb inflationary pressures.
“We have started the distribution of conversion kits and the setting up of conversion centres across the country in conjunction with the private sector,” Tinubu disclosed, expressing confidence that the CNG initiative will be a game-changer in reducing the nation’s reliance on imported petroleum products.
Despite being the largest oil producer in Africa, Nigeria’s refining capacity remains a significant challenge. The Dangote refinery, which was expected to end the country’s fuel import woes, has been grappling with crude supply issues as international oil companies reportedly refused to provide the necessary feedstock.
Farouk Ahmed, the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), acknowledged the ongoing reliance on fuel imports, stating that the Dangote refinery alone cannot meet the country’s fuel demands. The NMDPRA has, however, denied allegations that it has been granting licenses to import substandard diesel, clarifying that the issue was related to the Dangote diesel’s higher sulphur content.
In a proactive move, President Tinubu has ordered the supply of crude to the Dangote refinery in local currency, a move he believes will save the country over $660 million monthly. This directive aims to address the challenges faced by the refinery and ensure a more stable and sustainable fuel supply.
As Nigeria navigates these complex challenges, the Tinubu administration’s CNG Initiative and its efforts to support the Dangote refinery highlight the government’s determination to reduce the country’s reliance on fuel imports and drive economic transformation. The success of these initiatives will be crucial in securing a more energy-efficient and cost-effective future for the nation.