Product more expensive than in Libya, Algeria, Angola
Nigeria, at 40 cents (N166) average per litre of petrol price, occupies the eighth position among countries that have the most affordable petrol prices, a study by Zutobi published in April this year has shown.
However, its petrol price per litre, benchmarked in the US Dollar, is more expensive than that of Libya (second oil producer) and Angola (third producer) in Africa, despite Nigeria being Africa's largest crude oil producer.
This is despite an over N200bn monthly subsidy payment by the government to keep the product price at N165 per litre, with over N4tn spend pegged for the 2022 fiscal year.
According to Trading Economics, a global market website, Nigeria as of March, 2022, was the largest in Africa, with 1,238 million barrels per stream day (bpsd) oil production, overtaking Libya (1,220mbpsd); Angola is third, Algeria is fourth and Egypt fifth.
But according to the Zutobi research report, Nigeria is the eighth among countries with the cheapest petrol price at $0.40 (40 cents), while Libya, which is the second largest oil producer in Africa, shares the first position of countries with the cheapest petrol price globally with Venezuela at $0.03 (03 cents).
When converted to Nigerian Naira (NGN), Nigeria's 40 cent per litre of petrol is N166 (at N415/$1 exchange rate on Wednesday), while Libya and Venezuela's 0.03 cent is N12.46 per litre.
This means, with N166, Nigerians can buy 13 litres of petrol in Venezuela and Libya while that may not buy a litre of petrol in some Nigerian states where petrol sells for over N200/l.
Still in Africa, Algeria occupies the fifth position ahead of Nigeria with $0.32 per litre (N132/l), while Angola is in the seventh position ($0.35 – N145/l) still before Nigeria's average N166/l petrol price.
The third and fourth positions are held by Iran ($0.05 or N21/l) and Syria ($0.32 or N132/l); the sixth position is held by Kuwait at $0.35 or N145; the 9th and 10th positions are held by Kazakhstan ($0.41 or N170/l) and Turkmenistan ($0.43 or N178/l).
Further findings by the Zutobi research showed that the cost per gallon (3.7 litres) of fuel is less than a dollar in only three countries which are Venezuela, Libya and Iran, with Nigeria far from this at $1.82 or N755.63.
The Zutobi report also said petrol prices have fluctuated significantly all around the world and drivers will be paying very different prices for gas this year. However, Daily Trust reports that with over N200bn monthly petrol subsidy in place, the Nigerian government says it is keeping petrol price officially at N165 a litre.
How import bills inflate Nigeria's petrol price
Probing further on the high price of petrol in Nigeria relative to its crude oil production capacity, analysis of reports indicates that among the top oil producing countries in Africa which Nigeria leads, it is only the country that solely relies on importation of petrol and other white products (diesel, gas, kerosene etc) from other countries, including Algeria and Libya.
According to a McKinsey Refinery Capacity Database of 2020, there were over 600 operating refineries around the world as of the beginning of 2017.
As of 2020, there were 20 African countries that had refineries, with some countries having more than one.
Nigeria, the African oil producing lead has only three refineries which are out to refine 445,000bpsd but not operational, leaving the country with import of petroleum products mostly from Belgium which does not produce crude oil but owns three refineries.
The McKinsey data revealed that in Africa, Algeria, the fourth largest African oil producer has five operational refineries refining 671,000bpsd and exports gas to Nigeria; Libya, the second African oil producer has five operational refineries with 380,000bpsd and exports products to Nigeria.
Angola, the third largest African oil producer has just one but operational refinery of 65,000bpsd.
Iran, Nigeria, 7 others funding petrol subsidy
This paper found that most of the countries that have affordable petrol prices are spending heavily to subsidise it even when these countries are also producers and exporters of crude oil.
According to 2019 data on petrol subsidy funding obtained through the Fossil Fuel Subsidy Tracker – a tool developed by the Organisation for Economic Cooperation and Development (OECD) and the International Institute for Sustainable Development (IISD) – Iran was ahead in subsidy spending among the top 10 countries with the cheapest petrol prices as it spent $18bn in 2019 to clinch the third position on cheapest petrol prices.
Algeria spent $8.8bn on subsidising petrol to be 5th country with the cheapest petrol price; Venezuela which has the cheapest petrol price globally, spent N7.1bn to subsidise the product in 2019 while Libya which has the second cheapest petrol spent $3.7bn on subsidy the same year.
Kazakhstan's petrol subsidy gulped $3.1bn and is on the ninth position while Nigeria which is on the eighth position of cheapest petrol prices, spent $1.7bn (N705.7bn) in 2019.
Kuwait which holds the 6th position on cheapest petrol spent $1.2bn on the product's subsidy in 2019 while Turkmenistan which is the 10th on the list, spent $1bn on petrol subsidy in 2019, according to the data.
On the contrary, Angola, an oil producing country with the seventh cheapest petrol globally, has no record of petrol subsidy. Syria which is not known for oil production too but is the 4th cheapest petrol, also did not have any record of subsidy payment in 2019.
Commenting on whether Nigeria's petrol is truly affordable, Engr Ochube Onuh, a manager at Green Energy, an oil servicing and logistics firm, said it could be determined when Nigeria stopped paying subsidy for the product.
He said, "Like I have always emphasised, the product's price will rise in the first instance after subsidy removal if we continue to import, but as the supply increases, it will drive down the price.
"This is at the point where Nigerians will truly know if the petrol in this country is affordable or not."
Engr Onuh also said some neighbouring countries which did not have petrol subsidy sold the product officially at higher prices than that of Nigeria.
He said, "You have seen reports where people in other countries prefer to buy the Nigerian black market or smuggled petrol, like in Benin and even Cameroon, because they believe that it is cheaper than buying from their retail outlets. But take note that this so-called Nigerian petrol is heavily subsidised."