As we ramp up petrol supply, we must address infrastructure deficit

Nigeria in December 2024 broke an age-long jinx of perennial end-of-year shortage of petroleum products. It had become an albatross that hung on the nation over decades, usually destabilising economic and social activities. Long queues at petrol stations marked the shortage, while a few meters away hawkers made brisk business selling the very product for which motorists languished under the sun.

Thanks to the operations of the privately owned Dangote Refinery, and, we should add, Port Harcourt Refinery – one of the four refineries owned by the Nigerian National Petroleum Company Limited – Nigerians experienced better holiday travel as petrol was available in most parts of the country. With the refined products available, Nigerians only had to contend with the new, higher prices. That marked a new experience because in the past, travellers contended with both high prices and the unavailability of the product.

The supply revival has been taken further by the recent announcement by the NNPCL that its Warri Refinery has also resumed operations. The plant, with 125,000 barrel-per-day capacity, is operating at 60 per cent, NNPC said.

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However, this supply breakthrough will not be complete without urgent attention being paid to the infrastructure challenge. It is not yet time to celebrate, as the current state of the supply route is not sustainable, given the dearth of critical infrastructure. The structure of the Nigerian oil industry’s local downstream calls for immediate action to upgrade the delivery facilities.

While the product supply has improved, transporting it from refineries or seaports remains a challenge. Transporting petrol over land by tankers is fraught with dangers, including explosions, deaths, and losses. Recent experiences in various parts of the country support the call for a change in the mode of transportation of our refined products.

In October last year, over 150 people were burnt to death while more than 200 others were wounded from a fuel tanker explosion in Jigawa State. The dead and the wounded were said to have been scooping fuel that spilled after the tanker tumbled when the explosion occurred. Already in the new year, a petrol tanker explosion claimed four lives when a 33,000-litre diesel tanker exploded in Agbor, Delta State and went into flames.

We cannot go on this way. Nigeria should now pay attention to infrastructure. Given the nature of the oil and gas industry, the market cannot be said to be healthy without a safe transportation infrastructure. The proposed shift in mode of delivery will involve significant investments in rail lines, and or pipelines. Achieving this will cost billions of naira. The real cost of not doing this will be the amount of losses that will occur in the industry without such investments.

The truth is that Nigeria cannot afford to depend on petroleum tankers to supply the country’s nooks and crannies with petroleum products that can power the expected economic turnaround. The current state of our roads makes such a mode of transportation an invitation to disaster and an impediment to progress.

In the past 20 years or more, we have relied on this out-of-fashion mode of transporting petroleum products, and our society bears the scars of it. Our roads and cities are littered with carcasses of burnt tankers and of course the impacts on the environment.

It is no longer in dispute that Nigeria requires a boost in its infrastructure. From rail lines to roads, power plants, and distribution facilities, the country should embark on a sustained investment drive to boost its infrastructure. This reality is captured in the 2025 budget proposal presented to the National Assembly by President Tinubu. Infrastructure got the second-highest allocation of N4.06 trillion. This is surpassed by only the N4.9 trillion proposed for defence and security, sector. This shows the importance that the government attaches to the provision of infrastructure.

Having established the importance of a new mode of transporting our petroleum products, the key decision is to choose the best possible alternative or a combination of alternatives. In this case, the choice naturally revolves around pipelines and rail lines.

Pipelines are often exposed to vandalism, which makes them less attractive as a means of conveying refined products. Besides, the fact about the existing pipelines is that their integrity might have been compromised from many years of lack of or a reduction in use. Because of the reliance on importation for the supply of refined products, the attention paid to the maintenance of the pipelines may have been reduced. This implies that, even on the existing network of pipelines, running well over 5,000 km, a lot of investments will be made to get them ready for use as a distribution channel. Again, considering the problems that such an investment will solve for the country, it is a venture worth taking.

This leaves the rail lines as a key choice. Nigeria should focus on building or expanding rail lines across the country to facilitate the transportation of petroleum products.