Navigating Nigeria's economic landscape

As I hit send on this newsletter, it's 9 minutes to 5pm. Welcome to this Tuesday’s edition of 234Digest. I’m Samuel Okocha, your dedicated curator and editor. My aim is to maintain momentum in delivering audience-focused coverage on Nigeria's economic and business landscape with clarity and brevity.

A quick reminder: 234Digest now comes to you three times a week—twice between Monday and Friday, and a special Sunday edition that includes our popular Deeper Dive section. Unfortunately, due to unforeseen circumstances, we missed our Sunday edition. To make up for it, today’s edition will include the Deeper Dive section as a special feature.

In this edition, you'll find insightful coverage on Nigeria's economic growth, energy transitions, refinery operations, and international investments. These updates are crucial for understanding the current economic dynamics and making informed decisions.

Let's dive in.

Word for word

Today’s briefs

Economic growth: Progress and challenges

Nigeria's economy showed promising signs of recovery in the third quarter of 2024, with a year-on-year growth rate of 3.46%, according to the National Bureau of Statistics (NBS). This marks an improvement from the 3.19% growth in the second quarter and 2.98% in the first. However, this growth still falls short of the ambitious 6% target set by President Bola Tinubu upon taking office.

The services sector emerged as the primary driver, expanding by 5.19% and contributing over half of the GDP during this period. The oil sector, crucial for Nigeria's government revenue and foreign exchange, also saw a positive turn, expanding by 5.17%.

Energy transition: The rise of CNG

The removal of fuel subsidies has led to a dramatic increase in petrol prices, prompting many Nigerian drivers to switch to compressed natural gas (CNG). This transition is not only economically beneficial but also environmentally friendly. In Abuja, demand for retrofitting vehicles to CNG is high, with workshops fully booked for months.

Nigeria is leveraging its vast gas reserves, offering incentives like tax waivers on CNG equipment and financial support for vehicle conversions. This move aims to reduce dependency on crude oil and utilize its significant gas resources more effectively.

Port Harcourt oil refinery resumes operations

In a significant milestone for Nigeria's energy sector, the Nigeria National Petroleum Company Limited (NNPCL) has announced the commencement of crude oil processing at the Port Harcourt Refinery, situated in Rivers State. According to Femi Soneye, Chief Corporate Communications Officer of NNPCL, the refinery will operate at 60 percent capacity, processing 60,000 barrels per day. Truck loading operations will also commence immediately, ensuring efficient distribution of refined products.

Dangote refinery: Reshaping regional markets

In another significant development, the Dangote Oil Refinery has begun exporting gasoline, signaling potential shifts in regional fuel markets. A recent shipment to Togo highlights the refinery's growing capacity to influence supply beyond Nigeria's borders. This development could alter regional dynamics significantly if Dangote's production scales up further.

Despite these advancements, challenges remain. The government's initiative to sell crude oil priced in naira has encountered obstacles, with local refineries struggling to secure adequate supplies. The Dangote refinery, although benefiting from this scheme, still faces issues with consistent crude deliveries.

International investments and regulatory changes

Meanwhile, Brazilian meatpacker JBS has announced a $2.5 billion investment plan in Nigeria, which includes building six new factories focused on poultry, beef, and pork production over five years. This investment underscores Nigeria's potential as a hub for agricultural development.

In regulatory news, Nigeria's supreme court has overturned a law that legalized sports betting and gambling, paving way for renewed crackdowns on betting shops in Kano by Islamic morality police. This decision reflects ongoing tensions between modern economic practices and traditional moral codes.

Deeper dive: Port Harcourt refinery’s resurgence

The Nigerian National Petroleum Company Limited (NNPC Ltd) has provided a significant update on the operations of the Port Harcourt Refinery, marking a crucial milestone in Nigeria's quest for energy self-sufficiency.

Key details:

• The Old Port Harcourt Refinery is now operating at 70% of its installed capacity.

• Plans are in place to increase this to 90% in the near future.

• The Port Harcourt Refinery complex consists of two units:

  • An old plant with a capacity of 60,000 barrels per day (bpd)

  • A new plant with a capacity of 150,000 bpd

  • Together, these units have a total capacity of 210,000 bpd.

Daily production outputs:

• Premium Motor Spirit (PMS or petrol): 1.4 million liters (produced by blending Straight-Run Gasoline (Naphtha))

• Kerosene: 900,000 liters

• Automotive Gas Oil (AGO or Diesel): 1.5 million liters

• Low Pour Fuel Oil (LPFO): 2.1 million liters

• Liquefied Petroleum Gas (LPG): Additional volumes (specific quantity not provided)

Why it matters:

• This development significantly boosts Nigeria's domestic fuel production capacity.

• It reduces reliance on imported petroleum products, potentially easing pressure on foreign exchange reserves.

• The refinery's output could help stabilize fuel prices in the local market.

• The rehabilitation process has been ongoing for years, with the government approving $1.5 billion for repairs in March 2021.

Olufemi Soneye, NNPC Ltd's Chief Corporate Communications Officer, on Tuesday stated, "Today marks a monumental achievement for Nigeria as the Port Harcourt Refinery officially commences crude oil processing. This groundbreaking milestone signifies a new era of energy independence and economic growth for our nation."

Broader context and implications

This development is part of a larger effort to revitalize Nigeria's refining sector:

• Nigeria owns four refineries, but they have been largely non-operational for years despite numerous Turn-Around-Maintenance efforts.

• The government has spent significant resources on rehabilitation, with over N11 trillion allocated from 2010 to 2023.

• Plans are underway to bring the Warri Refinery back into operation as well.

The resumption of operations at Port Harcourt Refinery is expected to boost Nigeria's domestic fuel supply and potentially position the country as a net exporter of petroleum products in the future. However, challenges remain:

• Maintaining consistent operations and meeting projected capacity increases will be crucial..

• The refinery's long-term efficiency and profitability will be closely watched by industry observers and investors.

This resurgence of the Port Harcourt Refinery represents a significant step in Nigeria's energy sector reform, with potential far-reaching implications for the country's economy and energy security.

Quote of the day:

"Opportunities don't happen, you create them." - Chris Grosser

Photo of the day

And that's a wrap for today. Thank you for joining me for this edition of 234Digest. As we continue to navigate Nigeria's complex and dynamic economic landscape, your engagement and feedback remain invaluable. Remember, our newsletter now comes to you three times a week, aimed at unpacking relevant updates with clarity and brevity. Until next time, stay well and keep thriving. New here? Subscribe here