Recent developments in the downstream oil sector illustrate Nigeria's paradox of poverty in the midst of vast resources. While the Nigerian National Petroleum Company Limited has committed to supplying six million barrels of crude to the Dangote Refinery by December, five smaller domestic refiners are grappling with their inability to commence production. Refined product prices at the pumps continue to rise due to ongoing supply disruptions. It is imperative that President Bola Tinubu promptly initiates a program aimed at achieving self-sufficiency in domestic refining.

Officials, including the Minister of State for Petroleum, Heineken Lokpobiri, have acknowledged that the NNPC's failure to provide crude feedstock to the Dangote Refinery and five modular refineries has hindered their full operation. They attributed this setback to lower-than-expected crude production.

The Crude Oil Refinery Owners Association of Nigeria expressed their frustration, pointing out that several additional refineries were on the verge of completion but were stalled due to uncertainties in the supply chain.

In the meantime, fuel prices surged, heightening concerns for business owners and exacerbating the challenges faced by Nigerians. Manufacturers noted that the increase in the per-liter price of diesel to N1,275 in Lagos and N1,300 ex-Lagos was adding to production expenses and retail prices.

Dangote pointed out the NNPC's failure to supply the required crude as the reason for missing its most recent production commencement goal in October. This delay had occurred repeatedly, despite its official opening in May. Dangote has now set a new target date of November 30.

Nigeria's governance decisions often appear to defy common sense. Despite having over 37 billion barrels of crude oil reserves, making it the largest in Africa, the country remains the continent's leading importer of refined petroleum products.

Furthermore, Nigeria possesses four state-owned refineries, which have remained dormant for over three decades, running at a loss and incurring substantial costs through questionable turnaround maintenance contracts. Surprisingly, the government has yet to consider the logical alternative of divesting from these underperforming assets.

Rather than championing an ambitious initiative to become the leading refining hub in sub-Saharan Africa, officials continue to obstruct private local refining endeavors.

The delay in providing crude to local refiners raises questions; the NNPC should clarify whether it is still allocating itself 445,000 barrels of crude per day for sale and the importation of refined petrol, and whether it has complied with the recent directive from Tinubu to discontinue the controversial crude-for-refined products arrangement.

Analysts recommend that the NNPC allocate the entire 445,000 barrels per day to local refiners to ensure a consistent supply of feedstock for them. It is also puzzling that while the NNPC consistently secured its allocation for decades, regardless of crude production shortfalls, it now faces challenges in supplying private refiners while citing reduced production as the reason.

Tinubu, who, like his predecessors, holds the petroleum portfolio, needs to swiftly address this deadlock. It is not a complex issue: while pricing and subsidies may pose challenges, the solution to the downstream crisis lies in achieving self-sufficiency in refining.

The nation's imprudent practices must cease. In 2021, Nigeria spent $11.3 billion on imported refined products, making it the 18th largest importer globally and the leading importer in Africa, a figure that surged to $23.3 billion in 2022, as reported by Al Jazeera.

Comparatively, among OPEC member states, Algeria refines 677,000 barrels per day, Iraq boasts over 15 refineries with a combined capacity of 1.0 million barrels per day, Iran's 2.64 million barrels per day capacity accounts for 22% of the Middle East's total output, and Libya's refineries process 634,000 barrels per day. Even non-OPEC member Egypt, with a crude production of just 660,000 barrels per day, refines 833,000 barrels per day, some of which it exports.

Therefore, Nigeria should launch a national emergency program focused on domestic refining, with strong private sector leadership. The state-owned refineries should be promptly divested, and the NNPC should completely disengage from the downstream sector.