There is no denying that Nigeria is facing a major economic transformation, particularly in the energy sector, as it seeks greater self-reliance through domestic production of its oil resources. This quest for energy independence is being driven by indigenous investors who own refineries, marking a significant step towards emancipation from neo-colonial and imperialist control.
The decision to focus on local production of gasoline by indigenous investors as the linchpin of Nigeria’s economic independence, following political independence in 1960, is motivated by the central and crucial role that gasoline plays in the lives of Nigerians. The recent experience of the removal of the gasoline subsidy seventeen months ago under the current administration has plunged a large section of the Nigerian population into severe economic hardship and destitution. This highlights the vital importance of petrol in the transport system, the backbone of socio-economic activities for all Nigerians.
Key players in this quest for a second oil energy independence include the Dangote Refinery in Lekki, Lagos, with a capacity of 650,000 litres per day, as well as five modular refineries: Aradel in Port Harcourt, Rivers State, producing 11,000 barrels per day (b/d); Waltersmith in Imo State, with a capacity of 5,000 b/d; Edo Refinery and Duport in Edo State, producing about 6,000 b/d and 2,500 b/d respectively; and OPAC in Warri, Delta State, with a capacity of 10,000 b/d.
It is critical to note that past government policies such as the inclusion of certain economic activities in the government’s exclusive and competing lists, thereby preventing the private sector from participating in certain economic activities, are partly responsible for the impediment to gasoline production by modular refineries despite their operation for over two decades. For instance, although Aradel has been in operation since 2010, it has not produced gasoline due to regulated pump prices and the preference of the Nigerian National Petroleum Corporation (NNPC) to subsidize gasoline imports rather than local refineries.
As a result, local refineries have mainly produced other petroleum products such as diesel, naphtha and black fuel oil for over thirty years. It is absurd that local producers have been excluded from pump price subsidies despite their capacity to create many direct and indirect jobs. The lack of incentive for gasoline production is thus indicative of a high level of lack of patriotism on the part of those responsible for serving our country at a high level..
Supporting the Modular Refineries petrol refinery would have boosted our country’s Gross Domestic Product (GDP) instead of exporting capital and jobs to foreign countries that supply petroleum products to Nigeria. This export of much-needed hard currency has increased pressure on the naira and contributed to exchange rate instability. Unlike regulated petrol prices, prices of other petroleum products have historically been determined by market dynamics. With the reforms introduced by the Petroleum Industry Act (PIA) and the removal of petrol subsidies, Nigeria appears poised to achieve greater self-reliance through true energy independence. This process began with the local production of petrol at the Dangote Refinery in early September this year.
It is also encouraging to note that Nigeria is set to take a significant step towards economic independence and energy security on October 1, when the Dangote Refinery will begin receiving crude oil supplies paid in naira, enabling the refinery to sell to local distributors in the same currency. In a nutshell, Nigeria is on the verge of realizing its dream of energy self-sufficiency through domestic refineries.