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  • Oil & Gas - News
  • Updated: March 09, 2024

Nigeria's fuel import expenditure hits N3.5 trn in second half of 2023

Nigeria's fuel import expenditure hits N3.5 trn in second ha

The National Bureau of Statistics reports that Nigeria spent a staggering N3.5 trillion on gasoline imports in the second half of 2023.

Nigeria spent approximately N7.5 trillion on gasoline imports in 2023, compared to N7.7 trillion the previous year, according to the 2023 full-year foreign trade figures.

The termination of fuel subsidies was announced on May 29th, but it took several weeks to fully execute.

However, the country's fuel importation costs in the second half of the year was N3.5 trillion, compared to N3.9 trillion in the first half.

Using the 2023 exchange rate, the country spent almost $7.7 billion on gasoline imports in 2023.

During his inaugural speech on May 29, 2023, Tinubu's administration announced the end of gasoline subsidies.

This elimination kicked off a chain reaction, resulting in a tripling of fuel prices, which then spread to other sectors.

The inflation rate in May last year was 22.41%, but it has since grown to 29.9% as of January 2024.
Nigeria has relied on petroleum imports for nearly two decades, since refineries have failed to operate and meet rising demand.

Despite the start of operations at the Dangote Refinery, the private sector's capacity to refine and supply local demand remains years away.

According to some studies, the withdrawal of subsidies may lead to decreasing demand for petroleum goods as prices rise. However, as the naira depreciated, it became more expensive in naira terms to import things.

For example, in July 2023, following the naira's unification, the official exchange rate was N743/$1.
However, by the end of the year, it had dropped to N907/$1 on the official market and more than N1000/$1 on the black market.

The consequence is that, while the government may have saved money by reducing subsidies, the country now spends much more on importing the commodity, adding to the demand pressure on the US dollar.

Over the last five years, Nigeria has spent an astounding N23.5 trillion on motor spirit imports, better known as petrol.

Fuel importation has proven especially costly for Nigeria in 2022 and 2023, with a combined expenditure of N15.2 trillion—more than half of the entire cost expended in the previous five years.

This surge can be partly due to the naira's depreciation against the dollar over the last two years, which has forced Nigeria to spend much more in naira to import fuel than ever before.

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