Energy Experts rubbish World Bank's Position on Nigeria's Oil Sector
Energy experts have criticised recent recommendations by the World Bank urging Nigeria to deepen fuel importation and fully liberalise its downstream petroleum sector, warning that the advice is ill‑timed, economically regressive and in direct violation of the Petroleum Industry Act (PIA).
An energy economist and professor, Ken Ife, faulted the position during a televised interview on Nigeria’s economic outlook, noting that while parts of the World Bank’s latest Nigeria Development Update were analytically sound, its prescription on fuel importation threatens Nigeria’s strategic push for energy independence and local value addition.
“You cannot come to a country that is struggling, and which has just developed a vision of economic self‑reliance and then advise it to reverse course and return to fuel importation,” Ife said.
“That kind of recommendation undermines everything Nigeria is trying to achieve.”
He stressed that the advice directly contradicts the Petroleum Industry Act, which mandates priority supply of domestic crude to local refiners under the Domestic Crude Obligation framework.
“The law is very clear. Domestic refining must come first. Advising Nigeria to abandon that path is not just against government policy; it is a clear violation of the PIA,” Ife stated.
The economist warned that increased fuel importation would leave Nigeria more vulnerable to global supply disruptions, accelerate foreign exchange depletion and discourage ongoing investments in local refining, particularly at a time when private sector participation is expanding capacity.
“We are on track to build refining capacity that will exceed domestic demand and position Nigeria as an energy exporter. How can anyone credibly suggest that we abandon this progress and return to reckless import dependence?” he asked.
Ife also questioned the empirical basis of the World Bank’s fuel import recommendation, describing it as an unsupported addition to an otherwise rigorous report.
“This conclusion was strangely parachuted into what was largely a strong analysis. There is no evidence supporting a return to imports at a time when major refining countries are restricting exports,” he said.
While acknowledging the World Bank’s accurate assessment of Nigeria’s macroeconomic indicators, including GDP growth projections and sectoral performance—Ife cautioned that its fuel policy stance could worsen rather than improve economic conditions.
Echoing similar concerns, another energy expert, Kelvin Emmanuel, also criticised the World Bank’s position, describing it as flawed and disconnected from prevailing market realities.
Speaking during a televised interview, Emmanuel disclosed that the World Bank had reportedly withdrawn the contested Nigeria Development Update from its website.
“The World Bank has retracted the report. If you check the World Bank Nigeria website, you will see that the document has been taken down,” he said.
Emmanuel dismissed claims that imported petrol could be cheaper than locally refined fuel, insisting that current global market conditions make such assumptions unrealistic.
“There is no marketer today that can land petrol into Nigeria at less than ₦1,759 per litre when you factor in freight, insurance and supply chain risks,” he said.
He explained that rising crude oil prices—driven largely by tensions in the Middle East, have fundamentally altered pricing dynamics, noting that while futures prices hover around $100 per barrel, spot prices are significantly higher.
“Dated Brent is trading at about $144 per barrel, which translates to roughly ₦1,249 per litre before distribution and other costs,” Emmanuel stated.
According to him, any suggestion that imported fuel is cheaper could only be explained by quality compromises.
“The only way imported petrol can appear cheaper is if standards are compromised, which, historically, has been the case,” he said.
Emmanuel also rejected claims that fuel prices in Nigeria are excessively high, noting that petrol remains cheaper domestically than in neighbouring African countries.
“There is nowhere in the region where petrol is sold as cheaply as it is in Nigeria,” he said.
On inflation and the rising cost of living, Emmanuel argued that Nigeria’s challenges stem from inconsistent enforcement of domestic supply frameworks rather than resource scarcity.
“Fuel price pressures in Nigeria are largely contrived. If local refiners receive crude supply as stipulated by law, prices will stabilise and volatility will reduce,” he explained.
He further criticised the World Bank’s advocacy for expanded social safety nets funded through borrowing, warning that such measures conflict with Nigeria’s fiscal responsibility laws.
“Social safety nets are important, but you do not borrow money to share. Borrowing is meant for capital projects and human development, not consumption. If support is needed, it should come in the form of grants, not loans,” he said.
Credit Dangote Group PR
