Dr Timothy Okon advises Nigeria to implement petroleum product reserves to reduce vulnerability to global disruptions and stabilise domestic fuel supply.
Managing Partner at Teno Energy, Dr Timothy Okon says Nigeria must urgently implement strategic petroleum product reserves to protect the country from global supply disruptions and stabilise fuel availability nationwide.
Speaking during an interview on Thursday, Okon said the current pressures in the global oil market are largely driven by external factors rather than domestic challenges.
“The crisis we now find in our hands is not instigated by Nigeria and therefore the consequences necessarily comes from what economists would call negative externalities”
He explained that disruptions in global supply routes, particularly the Straits of Hormuz, have significantly constrained global crude supply, affecting market stability and pricing.
“The biggest issue, of course, is the Straits of Hormuz and that has meant that 20% of its supply has now been constrained or restricted”
According to him, Nigeria’s own crude supply challenges are compounded by prior commitments and financial arrangements tied to crude oil, limiting the volume available for domestic refining.
“Nigeria has always had an issue with the fact that we also use the crude to borrow money, et cetera”
A key solution, Okon stressed, lies in the implementation of strategic petroleum product reserves, as provided for under Section 181 of the Petroleum Industry Act (PIA).
This, he noted, affects the ability of local refineries to access sufficient crude, forcing reliance on imports amid already strained global conditions.
“What you really need is a strategic reserve with respect to the products”
He explained that such reserves typically cover 60 to 90 days of supply, allowing countries to absorb shocks during periods of disruption.
“Usually, that can vary between 60 to 90 days sufficiency. So you can tide yourself over when these events take place”
Okon emphasised that implementing these reserves requires infrastructure, planning, and political will, noting that sensitivities around pricing and additional costs have slowed progress.
“Given the sensitivities around pricing… Nigeria may not be very receptive… even though the provisions of the law are there”
Beyond short-term measures, he called for long-term policy planning, including investment in storage facilities and structured reserve systems to ensure fuel availability.
“So the strategic product reserve, really, is what we need to implement in both the near and the long term. That has to be done.”
While acknowledging the importance of renewable energy, Okon maintained that Nigeria must continue to depend on petroleum products in the immediate term due to current infrastructure realities.
“we still need to rely on petroleum products, your PMS, your diesel, and rely on that, because that’s what Nigeria currently has”
He also warned against a return to fuel subsidy, describing it as financially unsustainable and potentially burdensome to government resources.
“What we do not want is to have a general policy on subsidy. That would be very retrogressive, because it would be a huge commitment and it could end up being an unending commitment.”
Instead, he advocated for targeted economic measures, including improved wages, to help cushion the impact of rising fuel costs on citizens.
“the public sector should increase people’s take-home pay to cushion that effect”
Okon further urged the government to use potential revenue gains from high oil prices to reduce debt and strengthen fiscal stability, rather than expanding recurrent spending.
“that money needs to be saved, needs to be used to write down our debt”
He added that reducing debt obligations would free up crude volumes for domestic economic use and improve Nigeria’s participation in structured crude transactions.
“Once you can pay down your debt, then you wouldn’t need to devote those barrels”