- Independent companies previously imported half of supply
- State-owned oil company is sole provider under subsidy regime
Nigeria needs private fuel importers to restore stable supply and end months of shortages, according to Wale Tinubu, chief executive officer of Oando Plc, a Nigerian energy company with interests in oil exploration, gas distribution and fuel retailing.
“There are shortfalls and those shortfalls can only be fixed if the private sector is allowed to go back to its traditional role of providing 50 percent of the requirement of the nation,” Tinubu said Friday in an interview at the World Economic Forum on Africa in Kigali, Rwanda.
The state-owned Nigerian National Petroleum Corp., which usually supplied the other half, became the sole provider under a subsidy regime in which importers weren’t recovering their costs and faced difficulty obtaining foreign exchange for their orders as plunging crude prices eroded export income, he said.
The OPEC member relies on fuel imports to meet more than 70 percent of national supply. Four state-owned refineries with a capacity for 445,000 barrels of crude per day are currently producing a fraction of that due to poor maintenance and mismanagement.
President Muhammadu Buhari’s government on May 11 increased the price of gasoline by 67 percent to a cap of 145 naira per liter to reflect market costs and pave the way for private importers to return.
“You need to at least recover your cost of capital and also provide a return for future reinvestment for any industrial enterprise to survive,” Tinubu said.