The Nigeria’s 30% Drop in Fuel Usage After Border Closure

The Nigeria’s 30% Drop in Fuel Usage After Border Closure

Yes, it is a bombshell – with the closure of the land borders Nigeria has with some countries, the consumption of petroleum products in the nation has dropped by 30%: “The president said Nigeria’s domestic fuel consumption had dropped by more than 30 per cent since the closure, thus suggesting that about a third of reported fuel consumption by Nigeria was being smuggled to neighbouring countries where petrol price is much higher.”

While our President has used that as part of his justification to continue the closure, I personally think that the data is exposing the challenge in our nation. First, excluding Nigeria, Lagos state is the largest economy in West and Central Africa. Also, a local government area (LGA) in Lagos state like Eti-Osa LGA is bigger than the economies of most of the neighbouring countries. For these pockets of small countries to be using 30% of the fuel shipped out of Nigerian depots does imply that they are more economically dynamic since energy drives economies.

Mr Buhari said his administration’s directive on the border closure was meant to curb smuggling, especially rice, and that so far, the closures had saved the country huge sums on import bills.

He said his administration was betting on same measures to rekindle the country’s agricultural rebirth.

The president lauded actions taken by the President of Niger Republic, Muhammadou Youssoufou, including the dismissal of officials and a ban on use of the country as a dumping ground for Nigeria-bound smuggled goods.

This is what I think is happening: many factories in Nigeria are closing or reducing production due to the land border closure since most firms serve these small neighboring countries from Nigeria. And with those business decisions, the demand for fuels has dropped in the nation. The impact in West Africa is not accounting for up to 10% of this 30%. There are Nigerian companies who export exclusively to neighboring countries as they find better margins therein than in a more relative competitive Nigeria.  

Yet, there is one clear winner in this land border closure – security has improved in border communities in Nigeria. I do think that is really what the government should be focusing its case, as the fuel usage case is weak, as it is killing local production and giving these countries the opportunity to build resilience to decouple from Nigeria.

Remember: when America banned Huawei from using its technology, Huawei went and produced Mate 30 with no single American component (WSJ research). Now, the country has relaxed some of the restrictions, but Huawei is telling most U.S.. firms that the ship has sailed.  Lesson: that simple decision gave Huawei the opportunity to activate Option B. Nigeria should think twice on how we deal with our neighbors. That they come to Aba, Kano and Onitsha to buy things should not be taken for granted.

According to a report in the Wall Street Journal, the Chinese tech giant’s Mate 30 smartphone contains precisely zero American parts. The discovery was made thanks to an analysis of the Mate 30 by UBS and Tokyo-based tech lab Fomalhaut Techno Solutions, which disassembled the phone

Meanwhile, here are some other things to know:

We need more diesel in the courts.

Scores of litigants, including lawyers and witnesses, on Wednesday left the High Court of the Federal Capital Territory in Nyanya, Abuja, disappointed after the judge, Peter Kekemeke, cancelled the day’s sitting due to a power outage. “Besides, there is no diesel to run the generator. It is obvious we have to take a date and come back when electricity supply has been resolved,” Justice Kekemeke said.

Policy Disintermediates Discos on electricity:

The Federal Ministry of Power‘s new electricity distribution policy called “Willing Seller, Willing Buyer” was designed to bypass middlemen and sell power directly to consumers, a statement on Wednesday by Aaron Artimas, the Special Adviser (Media and Communications) to the Minister of Power, has said. Under the differential power distribution policy, electricity will be wheeled directly from the generation companies (GenCos) to willing consumers who are ready to fully settle their bills.

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