The removal of the petrol subsidy by President Bola Tinubu is taking a toll on European refiners according to Reuters.
“the black market for smuggled subsidised Nigerian fuel in Togo and neighbouring Benin and Cameroon has collapsed, further reducing demand for shipments via Nigeria. There is no reliable data on how much fuel was smuggled out of Nigeria under the subsidy regime, but a comparison of estimates from official and independent sources indicate more than a third of petrol could have left state oil firm NNPC’s depots every day to be sold illegally abroad.
Without the subsidy, the financial incentive for smuggling disappears.”
Corroborating the report on the effect of the subsidy removal on European refineries, Refinitiv lead oil analyst, Raj Rajendran, said, “The key point is demand from West Africa is drying up.
“Imports, however, are increasingly unaffordable as Nigeria’s naira has weakened to record lows since the central bank removed currency restrictions in June. At the same time, inflation is near two-decade highs.
The huge, much-delayed Dangote refinery was designed to address the domestic supply shortfall, but full 650,000 barrel per day production is unlikely before the second quarter of 2025, CITAC estimates.”
Meanwhile, the black market for smuggled subsidised Nigerian fuel in Togo and neighbouring Benin and Cameroon has collapsed, further reducing demand for shipments via Nigeria,” Reuters said.
“There is no reliable data on how much fuel was smuggled out of Nigeria under the subsidy regime, but a comparison of estimates from official and independent sources indicate more than a third of petrol could have left state oil firm NNPC’s depots every day to be sold illegally abroad.
“Without the subsidy, the financial incentive for smuggling disappears.”
Corroborating the report on the effect of the subsidy removal on European refineries, Refinitiv lead oil analyst, Raj Rajendran, said, “The key point is demand from West Africa is drying up.”
“Imports, however, are increasingly unaffordable as Nigeria’s naira has weakened to record lows since the central bank removed currency restrictions in June. At the same time, inflation is near two-decade highs.”
“The huge, much-delayed Dangote refinery was designed to address the domestic supply shortfall, but full 650,000 barrel per day production is unlikely before the second quarter of 2025, CITAC estimates.”
Meanwhile, the analysts told Reuters that it is possible that petrol demand would not fully recover in Africa’s most populous country.