National Bureau of Statistics reported that the amount spent on the importation of Premium Motor Spirit (petrol) in Year 2020 amounted to N2.11tn.
This amount showed an increase of 17.54 per cent as against N1.71tn spent on petrol imports in 2019.
Fuel consumption and imports slowed down in Q2 2020 as a result of the lockdown imposed by the Federal Government to contain the spread of COVID-19 pandemic in the country.
Petrol import topped the list of products imported into the country.
UN report as contained in United Nations International Trade Statistics Database, UN Comtrade disclosed that Nigerians spent $2.4bn on importation of generating sets in 20 years.
“According to NOI Polls, about 77.5 percent of Nigerians have resorted to purchasing and using alternative sources of power; such as generators and others due to the abysmal power supply.”
Nigeria is among the top six countries generating energy by back-up generators as India, Iraq, Pakistan, Venezuela, and Bangladesh.
“The six countries accounted for over 50 percent of the electricity generated (and fuel burned) by back-up generators in the 167 countries modeled by International Finance Corporation, IFC.”
The World Bank Group estimates that Nigeria spends three times as much on back-up generator power as compared to the grid.
Substantially the N2.11tn spent on the importation of Premium Motor Spirit (petrol) in Year 2020 can be attributed to back-up generator power.
These trillion of Naira would have generated activities, production and employment opportunity in the Nigerian economy.
The sum of N2.11 trillion spent on fuel importation (consumption) was 42.4 percent of projected deficit of N4.98 trillion in 2020 budget. Going by the fact that the projected deficit of N4.98 trillion was 3.57 percent of GDP in 2020 the amount gulped by fuel importation was 1.51 percent of GDP.
It was also 36.1 percent of aggregate revenue of N5.84 trillion and 19.5 percent of N10.81 trillion expenditure in 2020.
The sum of $1.5 billion proposed to be spent on refurbishing the refinery at the exchange rate of 379 N/$ was 26.9 percent of sum gulped by fuel importation in 2020.
It is this high level of import of fuel that led to forex scarcity. There was an increase in the demand for dollar for fuel importation which led to depreciation in the value of Naira.
The high value of import of fuel by Nigeria could lead to unfavourable trade balances, terms of trade and trade policies for the country.
The depreciation in the exchange rate has led to increase inflationary pressure recently being experienced.
The money spent on imports leaves the economy and this decreases the nation’s GDP.
The earlier the Nigerian government fixes its refineries the better.