CORAN backs downstream, says policy neutrality no longer enough

The Crude Oil Refinery Owners Association of Nigeria (CORAN) has expressed  confidence in Nigeria’s downstream petroleum sector.

It declared  that the industry has reached a defining moment where policy neutrality can no longer drive sustainable growth.

In a statement  on Monday titled: “True Faith in Nigeria’s Downstream: Why Local Refinery Companies Built While Importers Traded,” the association said Nigeria is gradually moving away from decades of structural dependence on imported petroleum products towards a locally driven refining industry, although significant challenges remain.

CORAN noted that after years marked by fuel subsidy distortions, massive foreign exchange losses and weak domestic refining capacity, the emergence of local refinery investments has reopened a crucial national debate: who has truly demonstrated faith in Nigeria’s downstream sector, those who built refineries or those who relied on fuel importation?

According to the association, the answer lies in capital commitment, risk exposure and long-term investment behaviour rather than rhetoric or market positioning.

“The faith in an economy is best measured by what investors are willing to build and what risks they are prepared to carry over time,” CORAN said.

It explained that local refinery companies, ranging from large-scale plants to mid-sized and modular refineries, have committed huge capital to fixed industrial infrastructure within Nigeria. Refining, it stressed, is one of the most capital-intensive and risk-exposed segments of the petroleum value chain.

“Investors must contend with construction and commissioning risks, uncertainties around crude supply, foreign exchange volatility, power and logistics constraints, evacuation challenges, regulatory inconsistencies and evolving policy frameworks,” the association stated.

CORAN added that once built, a refinery represents immobile capital that cannot be easily relocated, sold or exited without heavy losses. Beyond construction, refineries require strict operational discipline, compliance with product specifications, environmental responsibility, host community engagement and sustained participation in the domestic market.

“In this sense, refining is not a trading strategy but an industrial commitment,” CORAN said, noting that local refinery companies have collectively invested tens of billions of dollars in downstream assets whose value depends on Nigeria succeeding as an energy-secure and industrialised economy.

By contrast, the association observed that Nigeria’s downstream sector over the past three decades has been dominated by an import-dependent trading model that failed to deliver structural progress. During the fuel subsidy era, petroleum importation became highly lucrative, driven by price arbitrage, preferential access to foreign exchange, weak consumption verification and subsidy reimbursement systems.

CORAN recalled that several investigations revealed Nigeria paid for volumes of Premium Motor Spirit (PMS) far above realistic domestic consumption, costing the country billions of dollars in a short period. Despite the enormous profits generated during this era, reinvestment into domestic refining capacity largely failed to materialise.

Quoting data from the National Bureau of Statistics (NBS), CORAN said Nigeria imported over 20 billion litres of PMS in 2023, only slightly below 2022 levels, showing how deeply entrenched the import model remains even after subsidy removal.

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It added that trade data reported by Reuters indicate petrol imports rose to about ₦15.4 trillion in 2024, more than double the ₦7.5 trillion recorded in 2023, representing massive foreign exchange outflows.

“These resources could have circulated within the domestic economy through refining operations, logistics, storage infrastructure, petrochemical development and industrial employment,” the association said, arguing that importation consumed national wealth without building enduring capacity.

CORAN also questioned the destination of fortunes accumulated during the importer-dominated era, noting that if importation reflected genuine belief in Nigeria’s downstream potential, substantial reinvestment into refining and processing infrastructure would have followed.

“Instead, capital largely flowed into real estate, financial assets and other non-productive investments, as well as upstream acquisitions where crude was often sold to international traders rather than refined locally,” it said.

The association noted that Nigeria is now facing the consequences of two contrasting downstream philosophies: local refinery operators focused on domestic value addition, energy security and long-term resilience, and import-reliant operators whose business models depend on access to ports, foreign exchange windows and permissive import regimes.

Acknowledging that both groups contribute to the economy, CORAN said their positions diverge sharply during policy reform discussions. According to the association, local refiners advocate transparent crude supply mechanisms, coherent pricing and foreign exchange policies, and conditional import controls when domestic capacity can meet demand, while importers often push for unrestricted import access.

As the umbrella body for Nigeria’s refining industry, CORAN insisted that the country has reached a stage where deliberate policy choices are required. It called for guaranteed and transparent crude supply to domestic refineries through enforceable, rule-based allocation mechanisms insulated from discretion.

It also advocated conditional import licensing, stressing that imports should serve only as a balancing tool rather than a default option where local refining meets volume and specification requirements. In addition, CORAN urged alignment of foreign exchange and pricing policies to prevent structural disadvantages for local refiners.

“This is a wake-up call for clear policy differentiation. Companies that refine locally should not be treated the same as those limited to importation,” the association said, adding that such measures are standard industrial policy tools in serious energy-producing economies, not protectionism.

CORAN stressed that the debate is not about corporate rivalry but about the kind of downstream sector Nigeria wants to build. It warned that continued reliance on imports exposes the country to foreign exchange shocks, supply disruptions and fiscal instability, while supporting local refining strengthens energy security, creates skilled jobs and deepens industrial capacity.

In conclusion, the association said local refinery companies have already answered the question of faith through concrete actions by building plants and committing capital within Nigeria, while the importer model historically relied on cargoes and margins.

“As Nigeria charts the future of its downstream sector, policy must align with demonstrated commitment. In the downstream petroleum industry, faith is defined not by claims or trading volumes, but by what is built, what is sustained and what investors are willing to risk in the national interest,” CORAN said.