Nigeria’s Petrol Consumption Plummets by 28% as Subsidy Scrapped, Black Market Collapses

In a significant shift since President Bola Tinubu’s decision to abolish fuel subsidies at the end of May, Nigeria has witnessed a remarkable 28% decrease in average daily petrol consumption.

Figures released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) reveal that daily petrol consumption dropped from 66.9 million liters to 48.43 million liters in June.

For decades, the subsidy regime had kept fuel prices artificially low, but it had become increasingly burdensome for the country. In fact, last year alone, Nigeria reportedly spent a staggering $10 billion on subsidies, leading to wider deficits and escalating government debt.

The impact of scrapping the subsidy has been felt beyond Nigeria’s borders. The black market for petrol in neighboring Cameroon, Benin, and Togo, which heavily relied on smuggled fuel from Nigeria, has now collapsed.

Also, the World Bank estimates that Nigeria could save up to $5.10 billion this year by discontinuing the petrol subsidy and implementing foreign exchange (FX) reforms. Despite already spending $2.41 billion on subsidies during the first five months, this move presents an opportunity for substantial financial savings.

In response to these developments, the president of the Petroleum Retail Outlet Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, expressed support for the government’s decision.

Gillis-Harry highlighted that PETROAN has developed the Petroleum Products Passport (PPP), a transparent framework that can efficiently collate accurate data on petroleum consumption across the country.

While commending the current administration for its political resolve in ending the subsidy regime, Gillis-Harry emphasized the need for sustainable efforts to revitalize the nation’s refineries.

In parallel, the long-awaited expansion of Compressed Natural Gas (CNG) refilling outlets throughout Nigeria is now becoming a reality. Seven banks have committed to managing a revolving fund facility provided by the African Development Bank (AfDB), following the removal of the petrol subsidy.

Elder Chinedu Okoronkwo, National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), confirmed the association’s agreement with the bank. IPMAN conducted a thorough market survey on the conversion costs of existing petrol stations into CNG outlets, leading to this milestone achievement.

Investors King can confirm that IPMAN has already initiated the identification of interested members willing to co-locate CNG dispensers and infrastructure within their existing petrol retail outlets. This strategic exercise aims to identify qualified candidates eligible for loans that will support the establishment of 10-20 colocated CNG stations in each state during the first phase of the nationwide rollout.