Dollar Shortage Sparks Concerns Among Oil Marketers Over Fuel Importation

Expectations soared when oil marketers championed the removal of fuel subsidies and deregulation of Nigeria’s downstream sector.

However, months after the removal of subsidies and deregulation, concerns are growing about the potential resurgence of the country’s perennial fuel scarcity.

While President Bola Tinubu’s pronouncement in May marked the end of fuel subsidies, the Nigerian National Petroleum Company Limited (NNPCL) still monopolizes petrol importation despite the anticipated influx of independent oil marketers.

Emadeb Energy imported 27 million liters of petrol in July, but since then, independent marketers have struggled to secure imports, leaving NNPCL as the sole importer.

This monopoly undermines the sector’s deregulation, enabling NNPCL to set prices, raising concerns of renewed fuel scarcity.

Marketers attribute their hesitance to forex scarcity and rising international crude oil prices. The challenge deepens as oil prices surge to $94.95 per barrel, and the exchange rate reaches N770/$.

With Nigeria’s fuel prices skyrocketing from N180-200 per liter to N614-700 per liter after subsidy removal, many worry they might breach N720 per liter due to currency devaluation and global oil price hikes.

Dangote’s long-anticipated 650,000 barrels per day refinery, initially set for August, now promises hope to ease the crisis.

Experts advise diversifying focus to existing refineries, particularly Port Harcourt, rather than relying solely on Dangote’s private venture. This would curtail importation costs and reduce vulnerability to market volatility.

While Nigeria navigates these challenges, it remains crucial to bolster domestic refining capacities and ensure energy security, shifting from dependence on imports to sustainable local production.