Nigeria’s expenditure on motor spirit (also known as fuel) soared to N2.6 trillion in the first quarter of 2024, representing a 46% increase from the fourth quarter of 2023.
This data comes from the latest foreign trade report by the National Bureau of Statistics (NBS) for the first quarter of the year.
The cost of motor spirit imports was N1.8 trillion in the fourth quarter of 2023 and a combined N7.5 trillion for the entirety of 2023.
The increase in cost is linked to the depreciation of the exchange rate, which hit an all-time low at the end of the first quarter of 2024.
For example, in dollar terms, fuel imports amounted to approximately $2 billion, assuming a closing exchange rate of N1,309 as of March 2024.
This represents a significant drop in dollar terms from $4.4 billion in the corresponding period of 2023, where the NBS reported an import cost of N2 trillion, assuming the official exchange rate of N461/$1.
Fuel Import Data
Data from the NBS reveals that Nigeria incurred a total of N4.39 trillion on the importation of “fuels and lubricants (processed)”, broken down into N2.6 trillion for motor spirit and N1.756 trillion for others.
- This compares to N3.82 trillion incurred in the last quarter of 2023 and N2 trillion in the first quarter of 2023, indicating that the country is spending more on imports of this essential product required by Nigerians.
- The data also shows that import spending on fuels and lubricants has more than quadrupled since 2019, rising from N2.5 trillion to over N11 trillion in 2023.
- The increase in import costs can be attributed to exchange rate depreciation and a rise in demand for these products.
Impact of Exchange Rate on Fuel and Lubricants Imports
The cost of importing fuel and lubricants is significantly affected by exchange rate depreciations over time, as the NBS reports the data in Naira.
A cursory analysis of the annual data using Nigeria’s official exchange rate on the last day of the year shows that imports in 2019 cost $7.1 billion (N2.56 trillion), $7.4 billion (N2.83 trillion) in 2020, and $14.5 billion (N6.3 trillion) in 2021.
In 2022, Nigeria incurred $21.69 billion (N9.9 trillion), the highest in recent years, with a drop to $13 billion (N11.8 trillion) in 2023.
The first quarter 2024 import cost of N4.39 trillion for fuel and lubricants is estimated at $3.3 billion.
What This Means
- Despite the fall in the dollar cost of importing fuels and lubricants, Nigeria still spent an astonishing N4.39 trillion (N2.6 trillion on motor spirit) on importing products it should have the capacity to produce locally.
- Many Nigerians expect the commencement of production at the Dangote Refinery to be a major game changer that could save the country trillions of naira used to purchase foreign exchange to finance imports.
- However, reports that the Dangote Refinery also requires imports of crude oil to meet its refinery targets suggest that the refinery may not be the game changer we hope for.
