Nigeria Spent $65bn on Fuel Subsidy in 5 years – Oil Minister

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The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu has said Nigeria incurred subsidies for petrol and kerosene estimated at $65bn between 2011 and 2015,

The minister said this recently during a presentation at a two-day African modular refinery forum at the forum; organised by the Modular Refiners Association of Nigeria (MRAN), in partnership with the Department of Petroleum Resources (DPR).

Represented by the Deputy Director, Engineering and Standards of the DPR, Engr. Olumide Adeleke, Kachikwu said this amount excluded an estimated $6bn the country lost to vandalism of oil and gas infrastructure.

Had the subsidy bill been properly channelled, it could have financed the entire investment required to realise Nigeria’s vision of 50 per cent national refining capacity of crude oil before the year 2020.

Nigeria has refineries, but poor maintenance and lack of concrete investment have ensured the West African country remains heavily dependent on fuel imports. “The foreign exchange requirement for importation of petroleum products is estimated at $28bn (N3.35tn) annually, with 40 percent of the total amount (N1.34tn) dedicated to financing the logistics of importation,” Kachikwu said.

Reducing Imports Remain a Possibility

Despite these challenges, the minister said that his objective remained to attain 50 per cent domestic refining capacity by 4th quarter of 2018 and 100 per cent domestic refining capacity by the 4th quarter of 2019.

However, the Acting President of Nigeria, Prof. Yemi Osinbajo, said at the event that the Federal Government was working to develop a robust set of guidelines that would help investors seeking to establish modular refineries to do it well.

He said the government would now require prospective investors seeking a licence to operate modular refineries to present sensible business models before licences could be granted to them.

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