Nigeria Faces High Fuel Prices, Increased Imports in Q3 2024, Energy Experts Forecast


The Society of Energy Engineers (SEE) has projected that fossil fuel prices will remain elevated throughout the third quarter of 2024, indicating continued challenges for Nigeria’s economy. In its recent projection, the SEE highlighted concerns over rising fuel imports, which are expected to exert pressure on foreign exchange reserves and the stability of the naira.

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“With fuel imports anticipated to remain high, there will be mounting pressure on foreign exchange reserves, exacerbated by the persistent burden of petroleum subsidies on government finances,” the SEE stated.

The projection also warned of potential price hikes of up to 300% in some states compared to the same period in 2023, following the removal of subsidies and varying fuel prices across the country. Refineries are expected to operate at limited capacity due to ongoing maintenance and upgrade issues, further straining domestic fuel supply.

On a positive note, the SEE pointed out expectations for increased oil production as new fields come online, alongside efforts to revamp existing fields to boost output. However, it cautioned that investor confidence in Nigeria’s energy sector, influenced by the management of the 2024 licensing round by the Nigeria Upstream Petroleum Regulatory Commission, could be affected by security challenges in the Niger Delta, ongoing divestments by oil majors, infrastructure decay, governance issues, and challenges in implementing the Petroleum Industry Act.

The SEE also forecasted an increase in gas production with the launch of new projects, maintaining Nigeria’s robust position as a global LNG exporter. Despite this strength, concerns remain regarding gas infrastructure limitations, insufficient investments, and domestic supply shortages.

Regarding power generation, the SEE anticipated growth with the commissioning of new plants, coupled with ongoing upgrades in transmission and distribution infrastructure. However, it highlighted funding gaps due to inadequate investments and potential grid stability issues as persistent challenges.

“Labour unrest in the downstream and upstream petroleum sectors, likely in solidarity with organised labour over cost-of-living crises, could impact operations,” the SEE warned. It also noted potential protests by electricity sector workers over unpaid wages and benefits, aligning with broader labour concerns.

Efforts to implement the Host Community Development Fund under the Petroleum Industry Act were expected to continue, focusing on enhancing community engagement and development projects. Nevertheless, the SEE highlighted ongoing challenges such as insecurity, crude oil theft, artisanal refining, and oil spill incidents that could undermine these efforts.

According to the Organisation of Petroleum Exporting Countries (OPEC), Nigeria’s average daily crude oil production declined to 1.25 million barrels per day in May, reflecting operational challenges in the sector amidst broader economic uncertainties.

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