It’s always something with you
Dangote refinery might not solve Nigeria’s fuel importation problem
Good morning, Big Brains. Is it weird that I don’t have Christmas plans yet? My folks are trying to convince me to travel down to their place for the holidays, but I’m more sold on the idea of wearing matching PJs, sharing food with my neighbours and watching Christmas romcoms. I’m so hyped!
Let’s get into today’s edition:
Dangote refinery isn’t living up to its expectations
You made FG’s pocket fatter in 2023
Nigeria wants to convince you to buy locally-made spare parts
The Big Picks
Dangote refinery isn’t living up to its expectations
Nigerians have been roped into a three-way relationship with Dangote Refinery and principalities, and we’re not sure how to feel about it.
We were either too delusional to believe that Dangote Refinery could end Nigeria’s fuel importation problem, or the refinery has not lived up to its expectations.
Since the Dangote Refinery operations began, it has faced logistics issues, operational hiccups, and on-and-off controversy with marketers who prefer cheaper imported fuel. Now, data obtained from Nigeria’s petroleum imports suggest that our fuel import days are far from over.
Between October 1 and November 11, Nigeria imported 1.5 million metric tonnes of petrol (about 2 billion litres). We want to blame the principalities and powers that have kept the country in this near-success zone for too long, but the refinery’s output isn’t making it easy for us. Between September 15 and October 5, Dangote Refinery delivered only 148 million litres of petrol—a far level of workings compared to the 575 million litres the NNPCL hoped the refinery would deliver during that period.
Why is this a big deal?
It’s clear that the refinery has to fix its shit too but this over-reliance on fuel imports despite having the “largest refinery in Africa” isn’t just embarrassing, making things worse.
Nigeria currently spends about $15 billion annually on fuel importation, which contributes to the naira's constant loss of value and the economy's instability. Dangote Refinery, designed to process 650,000 barrels of crude daily, was meant to revolutionise Nigeria’s energy sector and help the country save money.
Some experts suspect there are reasons why the refinery hasn’t been able to live up to this expectation that no one is telling us. This suggests that something fishy might be happening in Nigeria’s oil industry.
We don’t want to be too ambitious, but there’s a new update that could reduce the country’s reliance on imports. Dangote refinery has signed a major deal with the Independent Petroleum Marketers Association of Nigeria (IPMAN) to supply 60 million litres of petrol every week, which is about 240 million litres a month. This is a win because it will boost fuel distribution across the country.
Chinedu Ukadike, IPMAN’s National Publicity Secretary, explained that this deal will help their members get petrol directly from the refinery, cutting out middlemen.
“We’re ready to lift millions of litres. IPMAN has always been a big player in Nigeria’s fuel distribution, and now Dangote is offering us over 60 million litres, depending on demand”, Ukadike added.
This partnership is expected to strengthen the connection between Dangote Refinery and Nigeria’s independent marketers and ensure that petrol gets to the people who need it faster. Hopefully, the reality is as good as it sounds on paper.
You made FG’s pocket fatter in 2023
The Federal Government’s wallet got a fat boost in 2023, and it’s all thanks to you. Information from the Ministry of Budget and Economic Planning shows that the country’s total earnings went up from ₦7.1 trillion in 2022 to ₦12.5 trillion in 2023.
They say that revenue increased by 200%, jumping from ₦0.8 trillion in 2022 to ₦2.4 trillion in 2023, due to increased crude oil production. Non-oil revenue (which is mainly taxes), which amounted to ₦10.1 trillion, made up 80.8% of the government’s total revenue.
Now this is the part where you see how you’ve contributed to putting heavy zeros in the government’s pocket. Corporate Income Tax (CIT) and VAT collections were ₦4.27 trillion and ₦3.64 trillion respectively. Money from taxes alone helped the government beat its revenue goal for 2023 which was set at ₦11.05 trillion.
Is this a good or bad thing?
On paper, it’s good. The government made so much money in 2023 but it doesn’t feel like it because most of the total revenue came from the pocket of regular Nigerians.
The Presidential Tax Reform Committee has the same plans for 2025, but this time, the country could make much more money from VAT alone, which is likely to increase from 7.5% to 10% in January 2025.
As good as the revenue numbers look, they mean nothing if the money is coming straight out of the pockets of struggling Nigerians who are barely adjusting to President Tinubu’s new reforms. We look forward to a season where the government will focus more on making money from its lucrative sectors and stop trying to get rich at the expense of its citizens’ pockets.
Nigeria wants you to buy locally-made spare parts
Speaking of making money from lucrative sectors, the country is preparing to take “Made in Nigeria” to another level. The National Automotive Design and Development Council (NADDC) says it’s ready to kick off local production of vehicle spare parts—a move that could save Nigeria $1 billion spent on imports every year.
NADDC’s big plan for Nigeria’s auto industry is to increase the use of locally made spare parts. If you can wear Nigerian ready-to-wear, you can use Nigerian spare parts.
Currently, cars in Nigeria are shipped in kind of already made, with only a few parts, like the tyres and exhaust removed and put back on to call it (in a process called assembling). The NADDC wants to change this by doing more of the work locally.
“We’re aiming for a situation where vehicles come in unpainted, and everything from welding to component production happens here,” the Director of Research Design and Development, Fidelis Achiv explained. “If we can start producing even 10 of the over 3,000 parts in a vehicle—at a standard that the world recognises—we’ll create a massive market and transform the economy.”
With 11 million vehicles on Nigerian roads, the potential for local production is huge. NADDC hopes this will not only reduce reliance on imports but also create jobs and add real value to the economy.
If this works out, Nigeria might just go from being an importer to a global player in the automotive industry. We’re keeping our fingers crossed and rooting for this project to fly.
This Week’s Big Question
“What does the Nigerian dream mean to you?”
Ngozi’s response - “In 2024, the Nigerian dream is to be able to afford inverter. Don’t judge me”
You can also share your response here, and if it’s as interesting as Ngozi’s, we’ll feature it in the next edition.
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