‘MoU with Niger Republic pose no long-term economic value’

By Tunde Shorunke

Industry experts have said that the recent Memorandum of Understanding (MoU) signed by the federal government through the ministry of petroleum resources with the government of the Niger Republic for petroleum products importation does not pose any long-term economic benefit for Nigerians.

The ministry of petroleum had explained that Soraz Refinery in Zinder, Niger Republic, has an installed refining capacity of 20,000 barrels per day compared to the nation’s 5,000bpd domestic requirement, which leaves a surplus of 15,000 barrels per day underutilized.

It, therefore, noted that the Nigerian government through the MoU will be evacuating the 15,000bpd backlog from the Niger Republic.

Reacting to this development, industry experts opined that the Nigerian government will be expending more of it Foreign Exchange (FOREX) to import petroleum products from the Niger Republic and also creating an enabling environment for the Nigerien while neglecting theirs.

In an inquiry by The Daily Times, a Developmental Economist and Chairman of the Board, Amaka Chiwuike-Uba Foundation (ACUF), Dr Chiwuike Uba, acknowledged that Nigeria is not only helping them to evacuate about 15,000bpd surplus of refined oil but also providing them with the market and the foreign exchange.

“At face value, one may conclude that the recent MoU signed by the Nigerian government with the Nigerien government on oil storage and transportation has some economic benefits to Nigeria and Nigerians.

“However, this may not be so given the previous experiences Nigerians have had with agreements entered into by the Nigerian government.

Without a doubt, Nigeria may marginally benefit from the agreement, but, the main beneficiary of the MOU is the Nigerien government.

Nigeria is not only helping them to evacuate about 15,000bpd surplus of refined oil but also providing them with the market and the foreign exchange thereto.

“According to the Department of Petroleum Resources, Nigeria consumes 38.2 million litres of fuel daily.

If we accept the above data as being correct, it means that the 2.3 million litres we are expected to get from the referenced agreement are insignificant. It can only meet 6.24per cent of our daily consumption requirement.

“It may even become more insignificant if we adopt the daily consumption figure released by the Minister of State, Petroleum Resources, Mr Timipre Sylva.

At 52million litres daily consumption, the product from the Niger Republic can only meet 4.59 per cent of Nigeria’s daily consumption requirement.

The main beneficiary of the agreement is the Niger Republic and not Nigeria. “More so, it is even difficult to determine the economic benefits when Nigerians do not have the complete terms of the agreement.

Whereas the cost of importation is expected to be lesser than the cost of importation from Europe and other countries, you may be shocked that it may be so in this instance.

Nigerians are currently confused if the sector has been deregulated or not because the only importer of fuel is NNPC.

“NNPC as the only importer regulates and fixes the price of fuel. It is an anomaly and unacceptable in the touted deregulated oil regime.

Full deregulation will open up the sector for more investments, competition, and price moderation/reduction.

PPPRA is almost comatose; hence, the need to scrap the agency to save Nigeria the billions of naira wasted as funding to the agency,” he added.

Also, the Chief Executives Officer (CEO) of Mascot Consult Limited, Marcel Okeke expressed shock over the new deal, adding that such an arrangement will further delay hope of making our local refineries work.

According to him, “Nigeria importing fuel from the Niger Republic? How is it, it looks odd because the Niger Republic has always been known to have depended largely on Nigeria for almost all its fuel consumption.

“But if the government of the day chooses to be importing fuel from the Niger Republic rather than other far-flung places, we face the reality.

“Perhaps, compared to what Nigeria spends now to import fuel from elsewhere, importing from the Niger Republic could cost less.

But such an arrangement could lead to a further delay in making our local refineries work. It certainly cannot be in the longterm best interest of Nigeria.

It’s a very queer arrangement. And could be counterproductive,” he added.