Nigeria, a nation which received 85 percent of its federal budget from oil and gas revenues in 2012, has a new president. Sworn in on May 29, Muhammadu Buhari now faces the monumental task of fulfilling his campaign promises, at least if he wants Nigerians to continue wishing him well. But first, Buhari will have to deal with the country’s current crisis: a wide scale fuel shortage that’s crippling the nation’s day-to-day operations.
Despite the fact that Nigeria is Africa’s top oil producing nation (and ranks 12th globally), it has almost no refining capacity. As a result, about 80 percent of Nigeria’s fuel is imported. Right now, there’s very little to go around.
The BBC recently reported that a crumbling deal between the Nigerian government and the nation’s fuel suppliers has left Nigeria without the much-needed resource. The country’s distributors choked off shipments over a massive $1 billion debt owed by the government. The shortfall has shut down businesses and grounded planes, and it is altogether hampering the economy. Although more recent talks have eased the issue slightly, Buhari still needs to resolve the problem entirely in order for Nigeria to get back to normal.
Perhaps the most forward-looking solution to Nigeria’s so-called petrocalypse is a $9 billion oil refinery currently under construction in Lagos. The project has been spearheaded by Aliko Dangote, the Nigerian businessman behind the Dangote Group and the richest man in Africa. The Dangote Group expects the 500,000-barrel-per-day refinery to come online by the third quarter of 2017, according to Reuters.
Until then, however, Buhari and his administration must ensure fuel supply for Nigeria by importing the refined products.
Buhari’s presidency may ride largely on how he deals with the oil and gas industry in his country, particularly when it comes to the Nigerian National Petroleum Corp. The Financial Times reports:
[Buhari’s] success or otherwise in fixing the company that manages the lifeblood of the economy – oil – could make or break his presidency and determine whether or not Nigeria lives up to its potential. Enmeshed in a web of patronage and allegations of criminality, the NNPC is, according to a vociferous group of technocrats, oil officials and politicians, leading Africa’s top oil producer on a path of self-inflicted decline.
It is also yet to be seen how Buhari will handle the massive environmental devastation caused by the oil and gas industry in Nigeria. Up until this point, the oil and gas industry has operated virtually unchecked, leaving widespread pollution in its wake and causing a slew of problems for local communities who depend on their surrounding environment for day-to-day living.