Nigeria: Foreign Vehicular Lubricants usage hits $500 million

Nigeria spent N71.6 billion on the importation of lubricants that would be blended locally in the first quarter of 2021, a latest trade data published by the National Bureau of Statistics (NBS) has shown.

At almost $2 a litre, Nigeria’s yearly base oil demand of 300 million litres puts the nation’s foreign exchange consumption at about $500 million or N205 billion ($1: N410), the report said.

The state of refining capacity in Nigeria for basic fuels and other petroleum has been pin pointed as a limiting factor that keeps the nation dependent on the importation of lubricants.

If this trend continues, it is projected that yearly expenditure is likely to exceed the $500 million benchmark especially when the rally in oil prices is considered.

The situation has led to at least 300 percent rise in the price of lubricants from about N850 per litre to N2000 per litre.

According to data from the Lubricants Producers Association of Nigeria (LUPAN), the country’s lubricant market demand volume totalled 600,000 metric tonnes in 2019, accounting for about 20 per cent of Africa’s total lubricants demand.
The impact of the COVID-19 pandemic has, however, affected demand volumes by at least 50 per cent.

With the cost of locally blended products higher than that of imported lubricants due to prevailing macro-economic challenges, many businesses with large storage capacities have resorted to raising Letters of Credit (LCs) for importation rather than buying locally.

Data from the Department of Petroleum Resources (DPR) showed that the 34 lube blending plants in the country have 120.57 million litres of base oil storage capacity.

Guardian/Hauwa Abu