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COVID-19: Fuel consumption revenue to decline by N4.3trn-Report 

COVID-19: Fuel consumption revenue to decline by N4.3trn-Report 

By Afeez Olawoyin

Nigeria is to witness an N4.3 trillion decline in consumption revenue of petrol and aviation fuel in 2020 due to the coronavirus pandemic.

The revenue loss and product statistics loss figures are contained in the Agusto & Co. 2020 Oil and Gas Downstream Report, a copy made available to Daily Sun.

This was even as the report ruled out the passage of the Petroleum Industry Governance Bill (PIGB) before the end of 2020, given Nigeria’s track record of weak policy implementation and the negative impact of the COVID- 19 pandemic on economic activities.

It lamented further that the delay in the approval of the bill has brought about uncertainty for potential investors.

The report explained further that the impact of the COVID-19 pandemic on economic activities in Nigeria has resulted in a decline in the consumption of petroleum products, adding that the lockdown restrictions which were implemented by the government as part of an effort to curtail the spread of the coronavirus disease affected the consumption of petrol significantly.

The report added that it expects the consumption of petroleum products particularly petrol and aviation fuel to decline to 27.2 billion litres in 2020 given the severely restricted travel and transportation activities during the second and third quarters of the year.

According to the research firm estimates, the total consumption of white fuels in Nigeria in 2019 stood at 28.1 billion litres, translating to total revenue of ₦4.7 trillion.

‘‘Our research shows that 99 percent of petroleum products consumed were imported as the country’s refineries operated below the installed capacities, sometimes down for months.

For instance, no white fuels were produced at NNPC refineries for the seven months from June to December 2019 due to ongoing rehabilitation works. The impact of the COVID-19 pandemic on economic activities in Nigeria has resulted in a decline in the consumption of petroleum products.’’

In the downstream industry, the report revealed that the growth of the sector remains hindered by the lack of substantial investments, import constraints, and regulated pump prices. This, it said, was largely attributable to the dominance of the government in the Industry, particularly in relation to the importation of refined petroleum products.

Over the years, the report maintained that the Industry has enjoyed stable demand for petroleum products as a result of the subsidies provided by the government which contributed to the gradual crippling of government finances.

However, the report was optimistic that the substantial local supply of refined petroleum products is imminent with the 650,000bpd Dangote Refinery which is currently under construction.

It submitted that the expansion of the Waltersmith refinery by 25,000 BPD to 30,000 BPD and other smaller modular refineries are also expected to drive increased local refining capacity in the near to medium term.

Nevertheless, it stated that a significant structural change in the industry is hinged on the approval of the Petroleum Industry Bill (PIGB), which aims to create efficient and effective governing institutions with clear and separate roles.

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