Nigeria cancels petrol import licences

Petrol import licences have now been suspended for a second month in Nigeria as regulators begin to enforce elements of the Petroleum Industry Act (PIA) that ensure imports are allowed only when domestic supplies are lacking, according to a Reuters report.

The decision to protect the domestic refining industry is a win for the country’s 650,000 barrels per day (bpd) Dangote Refinery, which had previously sued regulators and the Nigerian National Oil Co. Ltd. (NNPCL) as part of efforts to prevent imports from undercutting its profits.

Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) data show that no import licences were issued in February, with the Crude Oil Refineries Association of Nigeria (CORAN) highlighting that March has seen no licences issued either.

Currently, a regulator may grant import permits for fuel only when domestic production is insufficient to meet national demand, although the previous regulator had argued that petrol imports were necessary to maintain competition and prevent market dominance, according to Reuters.

Perhaps echoing these concerns, pump prices have since risen by more than 54% across the country, although this has been linked to the current war between the US, Israel, and Iran.

As an example, last week, Dangote increased its petrol price by N101 ($0.073) to N875 ($0.63) per litre from N774 ($0.56) per litre, with a senior official at the refinery noting that petrol prices had been increased due to volatility in global crude oil prices.

“The new gantry price is now N875 per litre from N774. The review became necessary due to changes in global crude fundamentals and replacement costs,” the official told The Punch.

Dangote’s decision to raise petrol costs was made on March 2 and followed a significant increase in international crude oil prices, which had climbed past $80 per barrel.

Although a halt to import prices seems set to lead to higher prices at home, Eche Idoko, spokesperson for CORAN, has approved of the decision.

“For us, anything that protects local production is a good move. The challenge now is to sustain the momentum,” he said.

Since February, Nigeria’s daily petrol consumption has fallen to 56.9mn litres per day from 60.2mn litres in January. In February, Dangote was able to supply 36.5mn litres of petrol and 8mn litres of diesel to the domestic market, which the regulator deemed satisfactory enough to supply the domestic market.