In Africa’s biggest oil-producing country, the price of lubricant, a by-product of crude oil, has skyrocketed as high as 200 percent with businesses suffering more from rising operational cost while Nigeria’s projected $683 million lubricant market continues to face investor apathy.
From heavy manufacturers to small retail businesses, this rise in lubricant price translates to a rise in the cost of servicing vehicles as well as plant and machinery, which is further hurting the ease of doing business in Africa’s biggest economy.
The country has an installed lubricant capacity of 600,000 metric tons, accounting for about 20 percent of Africa’s total lubricants demand, according to data from the Lubricants Producers Association of Nigeria (LUPAN).
However, Nigeria’s poor local capacity has affected the cost of locally blended products now currently higher than that of imported lubricants due to global calls for energy transition, leading to a gradual switch from base oils to synthetic oils, currency devaluation, and shutdown of many foreign refineries due to the COVID-19 pandemic.
These have led to at least 200 percent rise in the price of lubricants from about N850 per litre to N2,200 per litre.
Correspondents, who monitored the situation in parts of Lagos and its surroundings, observed that some major oil marketers were selling four-litre gallon for N23,000 from N12,000, few weeks ago.
They noted that accelerated domestic refining and processing of petroleum products would end the unstable petroleum pricing and allow Nigeria to explore the full potentials in the sector’s value chain.
According to a report by TechSci Research, a research-based management consulting firm, Nigeria’s automotive lubricants market is projected to reach $683 million by 2023.
“Despite huge domestic opportunities, Nigeria is still 100 percent import-dependent because there is no local refining of base oil, which is a major component in lubricant products,” said Emeka Obidike, executive secretary, Lubricants Producers Association of Nigeria (LUPAN).
Data published by the National Bureau of Statistics (NBS) revealed in the first quarter of 2021 that Nigeria spent N71.6 billion on the importation of lubricants that would be blended
Total Nigeria plc is the market leader with the highest market share in terms of sales volume in the Nigerian lubricants market, followed by Ammasco International Limited, 11 plc, Oando plc, Tonimas Nigeria Limited, Forte Oil plc, Conoil plc, Lubcon, MRS Oil Nigeria plc, A-Z Petroleum Products Limited, Dozzy Oil and Gas, Eterna plc, Techno Oil Limited and Ascon Oil Company Limited.
Experts say increasing favourable regulations in Nigeria’s lubricants market, collaboration with transportation companies, increasing knowledge of consumers and providing better quality lubricants at lower costs will aid the manufacturers of lubricants in Nigeria to grow and achieve higher profits.