The Nigerian Economic Summit Group (NESG) has stated that unless certain conditions are met, Nigeria may not reap the benefits of local crude oil refining which include economic growth, job creation and reduced dependency on imports etc.
The economic think-tank in its latest report titled, “Domestic Crude oil refining in Nigeria, Macroeconomics and Tradeoffs” listed the conditions to be met as regulatory reforms, infrastructure development, investment in human capital development etc.
According to the report, domestic crude oil refining should catalyze other sectors of the economy towards like manufacturing towards industrialization and enhance the welfare of Nigerians.
It referenced the case of Dangote refinery exporting Naphtha to Asia where goods produced with the product are further shipped to Nigeria as an example of how other countries would take advantage of local crude oil refining in Nigeria.
Furthermore, the report highlighted that the absence of industries capable of utilizing all the refinery’s products significantly reduces the socioeconomic benefits Nigeria could have gained from local refining. Refiners are limited to selling specific products domestically while exporting other by-products. The finished goods made from these by-products are then imported back into the country.
The report further emphasized that Nigeria may not experience substantial economic growth solely through local crude oil refining, as the prices of petrol and diesel are likely to remain high due to structural challenges in the sector, such as crude oil theft, which results in limited crude oil supply.
To ensure the country does not lose out on the socioeconomic benefits of local crude oil refining, the NESG called on the federal government to ensure adequate crude oil supply which will reduce import and domestic crude oil pricing for local refiners to catalyse the allied benefits of local refining.
However, they noted that the tradeoff for prioritising crude oil supply to local refiners would mean reduced earnings from crude oil sale for the government.
On pricing, they stated that contrary to expectations of the populace on reduced prices of petroleum products due to local refining, petrol prices would remain high as current refiners such as Dangote are importing crude oil.
