European Refiners Worry as Nigeria’s Petrol Demand Plunges 30%
By Adedapo Adesanya
Nigeria’s demand for Premium Motor Spirit (PMS), otherwise known as petrol, from Europe fell by almost 30 per cent as a result of the scrapping of fuel subsidy by President Bola Tinubu.
This is according to data provided by Kpler, a data and analytics firm that tracks energy information.
President Bola Tinubu, in his inauguration speech on May 29, 2023, announced an end to fuel subsidy, which gulped N4.3 trillion alone in 2022.
The removal of the fuel subsidy to the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) has led to a 35 per cent drop in average daily petrol consumption in Nigeria.
In a post shared on its official X account, the firm noted that Nigeria’s petrol subsidy removal is liable to squeeze European refiners, which lose one of their major outlets.
Nigeria accounts for a huge percentage of Europe’s petrol export market. West Africa and North America have traditionally been the main destinations for European exports.
The slump in Nigeria’s domestic fuel consumption is set to squeeze refining margins for European refiners.
Kpler noted that European exports to Nigeria decreased by around 160,000 barrels per day in July compared to May, which was around 250,000 barrels per day.
Reports have shown that the removal of government subsidies by the Tinubu administration has also decimated the black markets for the commodity in countries neighbouring Nigeria, such as Cameroon, Niger, Benin, and Togo. These markets thrived when cheap, subsidised fuel was smuggled from Nigeria into neighbouring countries.
Market optimists, including the Commissioner of Finance in Ekiti State, Mr Akin Oyebode, say that the 30 per cent drop off in fuel consumption is very important for the country’s balance of trade and payments).
He also noted that it is a positive for the fx outlook, “which will be more effective than all the demand management of the past.”
“The most important thing to resolve now is boosting fx supply in the short/medium term. We need to first clear all the stranded financing with development partners and also start to sell the fx component of government revenues at the I&E window,” he added.