• Nigeria’s 11.8m vehicles endangered as fake lubricants dominate market
• local lubricant plants rely 100% on imported raw materials
• Narto expresses concerns over rising operating cost
The absence of crude oil refineries for base oil in the country and total reliance on importation of raw materials for the manufacturing of the product amid the current foreign exchange crisis has pushed the cost of one litre of lubricant otherwise called engine oil to an average of N6,500, translating to N3.7 trillion yearly as Nigeria consumes 583 million litres of lubricant oil per year.
Although Nigeria has over 58 blending facilities for the production of base oil, stakeholders said yesterday that the high cost of the product has pushed the volume of fake and adulterated engine oil in the market to about 60 per cent, a development which endangers the existing 11.8 million vehicles in the country amid soaring price of new cars.
While the Dangote Refinery and a number of modular refineries are operating in the country, with the rehabilitation of Nigeria’s three refineries in Port-Harcourt, Warri and Kaduna yet to be completed, about 380.36 million litres of base oil is imported into the country yearly for the use by companies blending it locally even as the country relies on importation of synthetic lubricant oil.
Yesterday, one litre of synthetic Mobil One lubricant was selling for about N11,000, while Mobil Super 2000, which was about N800 per litre about two years ago, was selling for N6,900 per litre yesterday. Shell Rotella T6 synthetic engine oil, which was about N5,000 per litre two years ago, was trading for about N10,000 yesterday. The base oil version, Shell Helix, was trading for N4,500 per litre. The base oil version of Total lubricants was selling for about N7,000 per litre.
Across other brands, most companies sell engine oil between N3,000 and N10,000 per litre. This brings the average to about N6,500 per litre. When compared with the 583 million litres of lubricants consumed yearly in Nigeria, motorists and other users are staking N3.7 trillion on engine oil alone.
About two years ago when the cost averaged N1,000 per litre, the yearly cost was only about N358 billion. By implication, the prevailing situation caused a surge of 933.52 per cent.
A motorist, Abdullaziz Tukur, who was servicing his Mercedes E63 Benz at the Mobil petrol station at Utako Area of Abuja yesterday spent N128,100 on nine litres of Mobil One Emission Systems Protection fully synthetic engine oil. He spent an extra N8,000 on oil filters and N3,000 on service charges, bringing the cost to N139,100.
Another motorist, Adanma Okoro, whose Toyota Corolla requires four litres, went for the base oil version of Mobil and paid N18,200 for the product. She also paid N2,500 for oil filter and N3,000 for service charges, bringing the total cost to about N23,700 for a service that cost less than N10,000 about two years ago.
While base oil price at the international market was between $950 and $1,300 per metric ton depending on grades, and have been relatively stable on the backdrop of crude oil prices, stricter environmental regulations that forces refineries to upgrade as well as disruption in global trade following the Ukraine and Russia war affected freight costs and caused upward review of base oil prices.
For most operators in Nigeria, the exchange rate crisis appears to be an additional factor. By the end of 2022, the naira exchanged at N448 per dollar compared to N411 per dollar by the end of 2021. At the end of 2023, the rate stood at N907/$. However, the exchange rate as of last Friday was N1,482/$. By implication, if a metric ton of base oil was selling at $950 in 2022, operators would spend N425,600 for one metric ton. As of yesterday, even at the same price, it would be selling for N1.4 million.
Managing Director of Masters Group, Amechi Dibia, said while only the obsolete Kaduna refinery has a base oil facility, most refineries in the country only prioritise Premium Motor Spirit (PMS) and diesel despite the huge gap for lubricants in the country.
He noted that base oil and all other raw materials used in producing engine oil are imported into the country, thereby escalating the cost in the face of the biting exchange crisis.
National President of the Nigerian Association of Road Transport Owners (NARTO), Othman Yusuf, said about N100,000 is now required to service a truck due to the increased cost of the product.
Othman blamed the rising cost of haulage across the country on such additional factors.
“You can’t operate without engine oil. Every increase in the price affects your cost of operation. This is giving us serious concerns. We need at least 50kg of oil to service a truck and that is over N100,000,” he said. Former President of the Chartered Institute of Bankers of Nigeria (CIBN) and professor of Economics at Babcock University, Prof. Segun Ajibola, who noted that engine oil is a derivative of oil refining, which produces PMS (petrol), AGO (diesel) and DPK (kerosene), said the use remains inevitable for mechanical engines.
Ajibola, while noting that the blended product is influenced by the same factors that had pushed up the prices of petrol, diesel and kerosene in the Nigerian downstream market, said base oil product is imported and the landing cost is determined by the ruling exchange rate in the domestic market.
He insisted that resuscitation of local refineries is critical, adding that the turnaround maintenance of Port Harcourt and Kaduna refineries, coupled with the private refineries, would succeed in providing the essential ingredients for the blending of engine oil in the country.
“This will make the various grades of the product available to end users in Nigeria at affordable prices. It should be noted that engine oil of various grades is an essential daily need for light and heavy industries, automobile and mechanical engine users; hence quite essential to the life of an average Nigerian,” Ajibola said.
