In a move aimed at addressing concerns over the continued importation of substandard petroleum products, particularly diesel, the Nigerian Senate has decided to investigate the role of the Nigerian National Petroleum Corporation Limited (NNPCL) in these imports. The Senate also expressed concern about the state of government-owned refineries, despite significant recent investments aimed at revitalizing them. A 15-member committee has been set up to conduct a thorough investigation into these issues and report back in three weeks.
The committee, which will be led by Senate Majority Leader Opeyemi Bamidele, will be tasked with reviewing the practices of the NNPCL, as well as investigating the state of Nigeria’s refineries. Among the members of the committee are Senators Asuquo Ekpenyong, Abdullahi Yahaya, Tahir Monguno, Olamilekan Adeola, Diket Plang, Abdul Ningi, Khabeeb Mustapha, Ipanibo Banigo, Adams Oshiomhole, Adetokunbo Abiru, Osita Isinaso, Sahabi Ya’u, Olajide Ipinsagba, and Ekong Samson.
The investigation follows a motion brought before the Senate by Senator Asuquo Ekpenyong, representing Cross River South, who expressed alarm over the continuous importation of hazardous and substandard diesel into the country. The motion emphasized that such products are not only harmful to the environment but also detrimental to the health of Nigerians and the economy.
The Problem with Hazardous Diesel Imports
Senator Ekpenyong highlighted a particular instance of diesel imports in June 2024, when 12 cargoes carrying a total of 660,000 metric tons of diesel were exported from refineries to Lome, Togo. From there, the substandard diesel was re-routed to Nigerian markets. Despite being known for its poor quality, the diesel was unloaded into Nigerian ports at Warri and Obet Oil Terminal, after a series of ship-to-ship transfers.
The issue, according to Ekpenyong, lies not only in the low quality of the diesel but also in its pricing. The substandard diesel was priced below the fair market value, which constitutes a violation of global trade rules, particularly the World Trade Organization (WTO) guidelines on dumping. The WTO allows countries to protect their local industries from the harmful effects of dumped goods, which are products sold at below market value. By importing such low-quality products, Nigeria’s local industries are put at a disadvantage.
Concerns Over Regulatory Enforcement
Ekpenyong further criticized the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the agency responsible for overseeing the importation of petroleum products into Nigeria. He pointed out that although NMDPRA recently revised its standards for diesel importation in line with the Petroleum Industry Act of 2021, the agency has struggled to effectively enforce these standards. The ongoing importation of substandard diesel indicates a failure to ensure compliance with the new regulations.
Furthermore, despite the availability of local production capacity, NMDPRA continues to issue import licenses for diesel and jet fuel. This has raised questions about the necessity of such imports, particularly when Nigerian refineries, if properly maintained and utilized, could meet the country’s fuel demands. Ekpenyong argued that a total ban on diesel imports would be the most effective way to protect Nigerian consumers, businesses, and the local refining sector.
Senate Calls for Comprehensive Investigation
The Senate’s decision to probe the issue stems from a growing concern about the financial mismanagement and inefficiency surrounding Nigeria’s state-owned refineries. Despite the Nigerian government’s recent allocation of over $4 billion towards the rehabilitation of these refineries, they remain largely non-operational or inefficient. This has led to repeated promises by the NNPCL, the agency responsible for the refineries, that have failed to materialize into tangible results.
The Senate’s motion calls for the investigation to cover the operations of the NNPCL, particularly its Direct Sale and Direct Purchase (DSDP) arrangements. The DSDP scheme, which involves the sale of crude oil and the purchase of refined products, has been criticized for a lack of transparency and accountability. Lawmakers have expressed concerns that these arrangements are not in the best interest of Nigerians and have not contributed to solving the country’s fuel supply challenges.
The Senate has tasked the newly formed ad-hoc committee with evaluating the compliance of NNPCL with the provisions of the Petroleum Industry Act, including scrutinizing the level of transparency and accountability in the DSDP agreements. The committee will also look into the management of the refineries, the use of funds allocated for their rehabilitation, and the potential for revamping local refining capacity to reduce Nigeria’s reliance on imported fuel.
The Local Refining Capacity Debate
One of the central issues in this investigation is the question of why Nigeria continues to rely on imported diesel and other refined petroleum products despite having significant local refining potential. Nigeria is one of the world’s largest oil producers, yet its refining capacity is far below what is needed to meet domestic demand. This reliance on imported refined products places a heavy burden on the economy, with billions of dollars spent annually on fuel imports.
Local refineries, such as the ones in Port Harcourt, Kaduna, and Warri, have been plagued by mismanagement, underinvestment, and neglect for years. While there have been attempts to rehabilitate these refineries, the results have been underwhelming. The Nigerian government’s $4 billion investment in the refurbishment of these refineries has not yielded the expected improvements, and the refineries remain largely inoperative.
In addition, corruption and inefficiency within the NNPCL and other agencies involved in the petroleum sector have been major barriers to progress. The Senate has made it clear that it intends to investigate not only the technical and financial aspects of refinery rehabilitation but also the role of corruption in the failure of previous efforts. By doing so, lawmakers hope to find solutions that will enable Nigeria to fully harness its local refining capacity and reduce its dependence on fuel imports.
The Senate’s investigation into the importation of hazardous petroleum products and the state of Nigeria’s refineries is an important step towards addressing the country’s energy challenges. If successful, it could lead to stronger regulations, better enforcement of standards, and a greater emphasis on local refining. The committee’s work could also help identify areas for improvement in the management of Nigeria’s oil sector, with the aim of ensuring that the country benefits more fully from its oil resources.
Ultimately, the goal is to create a more self-sufficient and sustainable petroleum sector, one that meets the needs of Nigerians while protecting their health and the environment. The investigation could also pave the way for reforms that will make the country’s oil and gas sector more transparent, accountable, and efficient, addressing longstanding issues of mismanagement and corruption.
In the coming weeks, as the Senate committee delves into the investigation, Nigerians will be watching closely to see whether the findings lead to meaningful change or if it is yet another instance of promises made without tangible results. The outcome of this probe could have far-reaching implications for the future of Nigeria’s petroleum industry and its economy as a whole.
