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FG Reduces Kerosene Importation by 51.8 Million Litres

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Kerosene
  • FG Reduces Kerosene Importation by 51.8 Million Litres

The Federal Government has been systematically reducing the importation of House Hold Kerosene in a bid to increase domestic consumption of liquefied petroleum gas by various homes across the country.

An analysis of the latest report on Petroleum Products Imports Statistics released by the National Bureau of Statistics showed that the volume of HHK imported into Nigeria between May and September this year dropped by 51.894 million litres.

Vice-President Yemi Osinbajo recently stated that Nigeria spent $1bn as subsidy on kerosene in 2015 and stressed that this was because of the massive dependence on kerosene and firewood by millions of households in the country.

He, however, declared that the government had decided to unlock the domestic LPG value chain as this was one policy that the current administration was passionate about since Nigeria had one of the largest gas reserves in the world.

Also, to deepen the LPG usage, the government recently constituted an inter-ministerial committee to expand the use of the LPG, chaired by Osinbajo.

In the NBS report, which was obtained by our correspondent in Abuja on Friday, the bureau stated that a total volume of 86.031 million litres of kerosene was imported in May. The volume dropped to the 34.137 million litres in September.

A further analysis of the report showed that the country recorded a reduction of N6.369bn in the amount spent on kerosene importation during the review period.

In May this year, a total of N10.61bn was spent on kerosene importation, while the figure dropped to N4.25bn in September.

The Federal Ministry of Petroleum Resources and the Nigerian National Petroleum Corporation had both canvassed the increased use of cooking gas as opposed to kerosene.

Both organisations recently stated that the gas sector had the potential to revolutionalise Nigeria’s fuel consumption, as they noted that a gas policy was being developed to address the country’s gas development issues.

Operators, however, observed that despite the progress recorded in the domestic LPG sub-sector, there were still bottlenecks frustrating the full-fledged development of the market.

The bottlenecks included dearth of investments in the LPG reception facilities and supply infrastructure; throughput challenges as well as fiscal regime and regulatory environment such as imposition of value added tax on the LPG produced in the country while the imported product was granted waiver.

According to them, prior to 2007, theLPG was simply too elitist and the chain of supply was unsustainable, not until the intervention of the Nigeria Liquefied Natural Gas company when it dedicated 150,000 metric tonnes of the LPG to the domestic market.

“The volume was increased to 250,000MT in 2012, and from a pricing perspective, these efforts have helped to reduce the price of a 12.5kg cylinder by more than 50 per cent,” the Managing Director, NLNG, Mr. Tony Attah, said.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Crude Oil

Oil Trades Lower on US Hurricane Ease, China Economic Worries

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Crude oil

Oil prices dropped in the international market on Friday as traders overlooked supply disruptions from a hurricane in the US Gulf of Mexico just as moves by China to help its economy failed to impress some oil traders.

The global benchmark Brent crude futures fell by 2.3 percent or $1.76 to $73.87 per barrel while the US West Texas Intermediate (WTI) futures settled at 70.35 per barrel, down by 2.7 percent or $1.98.

In the world’s largest oil-producing country, the US, producers shut in more than 23 percent of oil output in the US Gulf of Mexico by Friday to brace against Hurricane Rafael.

According to the US National Hurricane Center’s latest advisory, the storm weakened to a Category 2 hurricane on Friday, and this eased worries and oil prices.

Meanwhile, concerns about China proved to be more than examined even as the government announced a package easing debt-repayment strains for local governments.

However, these measures do little to directly target demand as concerns about weakening demand in China, the world’s largest oil importer, have also contributed to the oil price decline after data showed crude imports in China fell 9 percent in October.

The weakening of oil imports in China is due to weaker demand for oil as a result of the sluggish economic development and rapid advance of electronic vehicles (EVs) in one of the most advanced economies.

Despite Friday’s losses, oil prices gained more than 1 per cent week-over-week taking support from the emergence of Mr Donald Trump as the next president of the US and the US Federal Reserve’s decision to cut interest rates by a quarter percentage point.

Oil producers are looking forward to fewer regulations on crude production under a Trump presidency, meaning higher oil supply and consequently lower prices.

On the flip side, a Trump administration also means more sanctions on Iranian and Venezuelan barrels, which could cut oil supply to global markets and potentially boost prices.

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Crude Oil

Brent, WTI Crude Prices Rise in Response to Expected Trump’s Policies

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Crude Oil

Oil prices rose nearly 1 percent on Thursday as the market considered how US President-elect Donald Trump’s policies would affect supplies.

Brent crude oil futures settled up 71 cents, or 0.95 percent at $75.63 a barrel while the US West Texas Intermediate (WTI) crude rose 67 cents, or 0.93 percent to $72.36.

Prices gained support from expectations that Trump’s incoming administration may tighten sanctions on Iran and Venezuela.

On Wednesday, the election of former Republican President Trump initially triggered a sell-off that pushed oil down by more than $2 as the US dollar rallied.

A strong Dollar makes oil expensive and this typically leads to a drop in prices.

In his first term, Mr Trump put in place harsher sanctions on Iranian and Venezuelan oil, limiting supply and supporting oil prices.

However, his successor, Mr Joe Biden briefly rolled back the sanctions but he would later reinstate them.

Such a move would raise the cost of China’s imports, piling pressure on a refining sector grappling with weak fuel demand and tight margins.

However, China and Iran have built a trading system that uses mostly Chinese Yuan and a network of middlemen, avoiding the Dollar and exposure to US regulators, making sanctions enforcement tough.

However, analysts say that the US government has been reluctant to take steps that would remove supply from the global market as a result of the Russia-Ukraine war.

Also supporting prices, the US Federal Reserve cut interest rates by a quarter of a percentage point at the close of its policy meeting on Thursday.

The US Federal Reserve said it will continue assessing data to determine the pace and destination of interest rates as officials reset tight monetary policy to account for inflation that has slowed markedly in the past year and is nearing the US central bank’s 2 percent target.

Interest rate cuts typically boost economic activity and energy demand.

Support also came as some companies cut supply in the US due to Hurricane Rafael. According to the US Bureau of Safety and Environmental Enforcement (BSEE), over 22 percent equivalent to 391,214 barrels per day, of crude oil production was shut in response to the hurricane.

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Three Oil Companies Ask Court To Stop NMDPRA From Seizing Their Petrol Import Licences, Accuse Dangote Refinery of Monopoly

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Aliko Dangote - Investors King

In response to Dangote Refinery N1 billion suit, three oil companies including Matrix Petroleum Services Limited, A.A. Rano Limited, and AYM Shafa Limited, have prayed the Federal High Court in Abuja to stop the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) from reviewing or withdrawing their import licenses.

The oil companies also urged the court not to block them from importing petrol in the interest of energy security and promotion of healthy competition in the Nigerian oil and gas sector.

Dangote Refinery had approached the court and filed and a N100 billion suit in damages against NMDPRA for allegedly continuing to issue import licenses to NNPCL, Matrix, and other companies for importing petroleum products such as Automotive Gas Oil (AGO) and Jet Fuel (Aviation Turbine Fuel), despite that the refinery is producing the products in quantity that meets Nigerians’ needs.

The refinery also dragged NNPCL, AYM Shafa Limited, A.A. Rano Limited, T. Time Petroleum Limited, 2015 Petroleum Limited, and Matrix Petroleum Services Limited in the suit.

Counsel to Dangote Refinery, Ogwu James Onoja SAN, in the originating summons, dated September 6, 2024, claimed that NMDPRA contravened Sections 317(8) and (9) of the Petroleum Industry Act (PIA) by issuing import licenses for petroleum products.

Onoja stated that such licenses should only be granted in cases of petroleum product shortages and not when Dangote Refinery is meeting the needs of the populace.

According to Onoja, NMDPRA has been discouraging local refiners such as Dangote Refinery by its actions.

Responding to the suit through their written address and counter-affidavit, dated November 5, 2024, and filed by Ahmed Raji SAN, the three oil companies said their businesses do not in any way hamper, disrupt, or harm Dangote Refinery’s operations.

The three defendants claimed the plaintiff allegedly sought to monopolise the petroleum industry in Nigeria, where it alone would control supply, distribution, and pricing.

In the defendants’ affidavit, deposed by Ali Ibrahim Abiodun, Acting Managing Director of AYM Shafa (with the consent and authority of Matrix, A.A. Rano, and AYM), it was stated that the defendants are qualified and capable of being licensed as importers of refined petroleum products under Section 317(9) of the PIA and that their licenses to import such products were lawfully issued by the appropriate authority, NMDPRA.

The deponent claimed that it typically takes an average of two months for Dangote Refinery to fulfill orders and that it rarely meets demand, with trucks waiting for months to be loaded at the refinery.

In contrast, he claimed it takes about three weeks to import petroleum products from offshore refineries.

The affidavit revealed that A.A. Rano’s oil depot in Lagos has a storage capacity of 55,000,000 liters and can load about 200 trucks per 24 hours.

The deponent stated that the company also owns 220 filling stations and another 85 affiliates and leased filling stations.

According to the deponent, AA Rano was one of the first to take delivery of AGO from Dangote Refinery, loading 20,000 MT of AGO on or about April 16, 2024, and has since purchased and loaded additional cargoes totaling approximately 190,000,000 liters.

Despite this patronage, the affidavit claimed that Dangote Refinery has continued to place obstacles that make it difficult for A.A. Rano to purchase products solely from the refinery.

The oil companies called on the court to dismiss the suit.

Meanwhile, the court adjourned the matter till January 20, 2025, for a status report.

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