Amidst lingering queues at petrol filling stations, the Central Bank of Nigeria (CBN) has said that the country spent a total of $8.71billion on the importation of petroleum products in the first six months of this year.
The apex bank disclosed this in its just released “Economic Report” for the second quarter of 2022. According to the CBN, the cost of importing petroleum products increased by 6.9 per cent to $4.50 billion in Q2’22 from $4.21 billion in the preceding quarter “to bridge the persisting supply gap in the economy.”
This means that the total cost of importing petroleum products in H1’ 2022 amounted to $8.71billion (about N3.75trillion). Although Nigeria is one of Africa’s largest crude oil producers, the country’s inability to ensure that its four refineries, with a combined capacity of 445,000 barrels per day (bpd), efficiently process oil, has meant that it depends heavily on petroleum products imports.
Thus, even when external shocks, such as Russia’s invasion of Ukraine on February 24, leads to a significant increase in oil prices, Nigeria is unable to fully benefit from the situation as it spends huge amounts on imported petroleum products annually.
In its Q2’22 Economic Report, the CBN stated that though further commodity price improvement resulted in export earnings rising by 11.5 per cent to $19.30 billion in the second quarter of 2022, compared with $17.30 billion in the preceding period, and with crude oil and gas exports (which accounted for 88.4 per cent of total exports), increasing by 11.1 per cent to $17.06 billion, compared with $15.36 billion in the preceding quarter, petroleum products imports also increased, during the period, to $4.50 billion from $4.21 billion in the previous quarter.
The report stated: “The challenges in global supply chains, arising from the lockdown in China and the Russia- Ukraine crisis, subdued merchandise import in the review period. Provisional data shows that merchandise import fell by 5.2 per cent to $12.95 billion in the second quarter of 2022, relative to $13.66 billion in the preceding quarter.
“This was occasioned majorly, by the decline in the importation of non-oil products by 10.6 per cent to $8.45 billion, from $9.45 billion in the preceding quarter. “However, the import of petroleum products increased by 6.9 per cent to $4.50 billion, from $4.21 billion in the preceding quarter, to bridge the persisting supply gap in the economy.”
New Telegraph reports that at the International Monetary Fund(IMF) /World Bank Annual Meetings in Washington DC, last year, CBN Governor, Mr. Godwin Emefiele, disclosed that Nigeria spends almost 40per cent of its scarce foreign earnings on the importation of petroleum products and petrochemicals, thereby putting pressure on the naira exchange rate.
He, however, expressed optimism that once the Dangote Refinery and Petrochemical Plant commences operations, the country would be in a position to be able to save the huge amount of the FX it spends on the importation of petroleum products as well as petrochemicals and that the apex bank would in a better position to float the naira.
Emefiele stated: “On the Dangote Refinery, by the time it begins production latest July next year, it is going to be a major source to save forex for Nigeria. Right now, the overall forex we spend on imported items, the importation of petroleum products consumes close to 30 per cent.
“By the time you add diesel, aviation fuel, petrol and the rest of that which makes up the 30 per cent, the Dangote Refinery has the capacity to produce 650,000 barrels per day. There is a domestic component that is about 455,000 barrels. Even if the 455,000 is what is sold to Dangote in naira alone, it is going to be a major forex savings for Nigeria.”
SOURCE: newtelegraphng.com