2018 Reports

Nigeria: Downstream linkages

Maennling, Nicolas Wolfram; Toledano, Perrine

Despite the presence of favourable factors for a successful downstream industry—namely, large reserves of crude oil (the 10th largest in the world), domestic demand for refined petroleum that exceeds current production and historical government efforts to encourage a domestic industry—Nigeria has rarely been able to meet its domestic demand and become a net exporter. Less than 1 per cent of national GDP comes from the downstream oil sector.

Political interference in the management of the refineries has created obstacles for the sector and paved the way for persistent under-capacity utilization. Voices for full privatization of the downstream sector have risen on the grounds that “ordinary citizens are not the main beneficiaries of the Nigerian National Petroleum Corporation (NNPC)’s unreliable refineries.” Nigeria’s downstream policy to date has resulted more in draining government coffers than in promoting value addition and local benefits.