Nigeria: Stop Issuing Indiscriminate Fuel Import Licences, Economist Urges NMDPRA
The Centre for the Promotion of Private Enterprise (CPPE) has urged Nigeria's NMDPRA to cease issuing indiscriminate fuel import licenses, advocating for approvals to be tied to independently verified domestic supply gaps.
Intelligence analysis by Gemini 2.5 Flash
An economist, Dr. Muda Yusuf, through the CPPE, has called on the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to reform its fuel import licensing process. This comes as Nigeria experiences a significant surge in petroleum product imports despite expanding domestic refining capabilities, raising concerns about energy security and economic efficiency.
Imagine Nigeria is like a family that just built a big new kitchen to cook all their food. But instead of cooking, they're still buying a lot of takeout from restaurants. An expert says the family should only buy takeout if they really can't cook enough food themselves, not just because it's easy. This way, they save money and use their new kitchen, which helps everyone in the family.
Analysis
Nigeria's petroleum product import policy is under scrutiny following a significant increase in fuel imports, prompting the Centre for the Promotion of Private Enterprise (CPPE) to advocate for a more structured and transparent approach. The CPPE's Director/CEO, Dr. Muda Yusuf, highlighted a concerning trend where average Premium Motor Spirit (PMS) imports escalated sharply from 5.9 million litres per day in May to 19.7 million litres per day in July. This surge pushed the share of imports in total PMS receipts to 43.3 percent in July, a substantial rise from 12.4 percent in May. This development is particularly alarming given the recent expansion in Nigeria's domestic refining capacity, including the Dangote Refinery's reported test run above 700,000 barrels per day in June, and other domestic refineries achieving an average capacity utilization of 99.12 percent in April. The economist argues that imports should strictly serve as a gap-filling mechanism, not a parallel market that undermines local production. The CPPE's policy brief, "On Rising Petroleum-Product Imports and the Future of Domestic Refining," underscores the need for regulatory discretion to align with Nigeria's industrialization and energy security objectives, as contemplated by Sections 317(8)-(9) of the Petroleum Industry Act.
Dr. Muda Yusuf
Dr. Muda Yusuf, representing the CPPE, has been a vocal proponent for a strategic overhaul of Nigeria's fuel import regime. His primary concern stems from the observed disconnect between the nation's growing domestic refining capabilities and the escalating volume of imported petroleum products. Yusuf emphasizes that import permits should only be granted when there is a clear, transparent, and independently verified shortfall in domestic supply that local refiners cannot meet at competitive standards. He warns that an unchecked import policy could severely undermine critical national objectives, including foreign exchange conservation, job creation, and the overall investment confidence required to build a robust domestic refining ecosystem. The economist's call for stronger oversight and coordination among regulatory bodies like the NMDPRA, NUPRC, and FCCPC reflects a comprehensive vision for a more efficient and equitable energy market.
NMDPRA Data
The recent data released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) serves as the empirical basis for the CPPE's urgent appeal. The figures reveal a dramatic reversal in Nigeria's fuel import dependence, with PMS imports nearly quadrupling in just two months. This sharp increase, from 5.9 million litres per day in May to 18.1 million in June and 19.7 million in July, indicates a significant shift in the supply dynamics. Consequently, the proportion of imports in total PMS receipts jumped from 12.4 percent to 43.3 percent within the same period. This data directly contradicts the narrative of increasing domestic refining self-sufficiency and highlights a potential policy misalignment that could have profound economic consequences for Nigeria, including increased pressure on foreign exchange reserves and a disincentive for local investment in refining infrastructure.
Dangote Refinery
The operational status and capacity of the Dangote Refinery are central to the debate surrounding Nigeria's fuel import policy. The article specifically cites the refinery's reported test run above 700,000 barrels per day in June, alongside other domestic refineries achieving nearly full capacity utilization in April. This significant expansion in local refining capability, coupled with an increase in Nigeria's seaborne petroleum-product exports, should theoretically lead to a reduction in import dependence. However, the NMDPRA's data on surging imports suggests that the benefits of this expanded capacity are not fully translating into reduced foreign purchases. The CPPE's recommendations, including giving qualified domestic refiners a time-bound opportunity to meet identified supply gaps and limiting import permits to verified residual shortfalls, aim to ensure that the investments in facilities like the Dangote Refinery are fully leveraged to achieve national energy security and economic growth.
Key points
- The Centre for the Promotion of Private Enterprise (CPPE) urges NMDPRA to stop issuing indiscriminate fuel import licenses.
- Nigeria's average Premium Motor Spirit (PMS) imports surged from 5.9 million litres/day in May to 19.7 million litres/day in July.
- The share of imports in total PMS receipts rose from 12.4% in May to 43.3% in July, despite expanded domestic refining capacity.
- CPPE's Director/CEO, Dr. Muda Yusuf, advocates for imports to serve strictly as a transparent gap-filling mechanism.
- The CPPE proposed a 10-point framework, including publishing supply-and-demand balances and requiring formal supply-gap determinations before approving imports.
If the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) adopts the CPPE's recommendations, Nigeria could significantly reduce its reliance on fuel imports, thereby conserving foreign exchange and strengthening its domestic refining industry. This shift would foster job creation, enhance energy security, and promote a more competitive market environment for petroleum products.
Should the NMDPRA fail to implement stricter, transparent import regulations, the current trend of indiscriminate fuel imports could persist. This would undermine the viability of domestic refineries, drain Nigeria's foreign exchange reserves, and hinder the nation's long-term industrialization and energy self-sufficiency goals, potentially leading to market inefficiencies and economic instability.
