Port Harcourt — Poor policy making in the area of nonfunctional refineries and importation of refined petroleum products cost the country a whopping $13.13billion in the year 2019 alone, an Economist has said.
Chief Coordinator, Institute of Chartered Economists of Nigeria, South-South, Friday Udoh, said the country consumed about 20 billion litres of PMS in 2019, all of it which was imported.
Udoh said this in a paper titled, “Water! Water Everywhere: Non-evidenced based policies and the cost of economic woes, self inflicted.
The Economist explained that if the nation’s four refineries which had the capacity to refined 445,000barrels of crude oil per day, was functioning at optimal capacity, Nigeria would had imported only 40percent of what it consumed in 2019.
He said refining PMS in-country would have yielded the country 11.974 billion litres, amounting to N16.21billion or $53.1million; AGO $143.5million, Kerosene $69.9million; LPG $18.74million; jet fuel $2.21billion and others $396.6million, in 2019 alone.
“If the 445,000bpd combined capacity of the four refineries, designed to process both imported paraffinic and Nigerian Crude Oil, 110, 000 bpsd capacity to produce LPG, PMS, HHK, ATK, AGO, DPK, LPFO, HPFO and Linear Alkyl Benzene, were operational, it will only take Nigeria to import a 40.15 percent amounting to 8.03 billion litres.
“From the analysis, the 20 billion liters of PMS imported to the country when the available country’s refined capacity would have been put to use it would have been contributed to 59.87 per cent, the same as 11.974 billion litres.
“The parameters adopted in these calculations are; average brent crude price in 2019 equals $46, multiply by 445,000 bpd, 16 percent for various taxes, 11 percent distribution and marketing cost, together with 21 per cent refining cost and the 51 per cent crude oil cost.”
The Economist said the impact of non evidence based policy making disposition of the present government, according to the paper has formed a new normal in the life of every successive governments in Nigeria.
“Calculating the average PMS pump price in 2019 was N134.2 ($0.44) per litre translating to N 1.61tn ($5.26855bn) a 98.992 per cent higher in cost to producing in-country, the same as N1.6trillion ($5.22billion) a cost considered too heavy for Nigerian consumers and the topsy -turvy economy to bear.
“AGO when processed in-country would have amounted to N43.80billion ($143.577million). Against the imported AGO at N1.6trillionn ($5.3billion) translated to N208.35 ($0.6831) per litre. Comparing this indicates that imported AGO cost is higher by 97.27 percent, the same as N 1.56rillion ($5.12billionn).
“Kerosene, when processed in-country based on the combined capacity of the four State refineries is foreclosing to have yields about 67,640 litrers per day and 24.7million litres per years would have amounted to N 21.35million ($69,991.064).
“Against the imported AGO equal N7.11billion ($23.31million). Translating to 99.66 percent, just as N7.51 billion ($ 23.23 million).
“LPG production capacity of the four plants stood at 907.31million litres per year (12.5 kg cylinder corresponds to 24.5 liters.). The imported LPG cost N158.6 ($0.52) per litre comparing to N6.30 ($0.021) when processed in-country.
“Multiplying the latter cost, according to the country’s built refined capacity, at 907.31 million litres placed the imported LPG at 96.03 percent the same as N138.2 billion ($453.063million) higher, compared to when the same quantity is processed in-country, this saw the cost when processed in- country at N5.72billion ($18.74million) translating to N6.30 ($0.020651) per litre.
“With cost of Imported LPG at this quantity cost economy an over N143.9bn ($471.80mn) just the same as N158.60 ($0.52) per litre. By implications Nigerian consumer’s pays 96.03 percent higher for every 1 litre or 12.5 kg LPG consumed.
“On the Jet fuel production, utilising the country 445,000bpd capacity refineries would have yielded 2.73 billion litres per year at N1.6551 ($0.00543) per litre amounting to N4.51billion ($14.7723million) against an average selling price of N24.30 ($0.81) in Nigeria as at 2019 and based on the country’s processing potential equals, N672.531billion ($2.21billion) a 99.3percent higher when produced in-country.
Comparing the five other derivatives, Udoh in the paper said, processing these products in-country will corresponds to N28.762 ($0.0943) per litre the same as $396.6101million in 2019; against the importation at the present four refineries configuration of the product which corresponds to N 120.9661trillion ($396.6101million).
“Comparatively, the differences stood at N 120.71billion ($395.77million) the same as 49.40 per cent increase in imported derivatives comparing to processing same in-country.”