Nigeria Cuts Fuel Sulphur Cap, but Still Above Target

Fuel pump.
31 May 2019

Nigeria is expected to cut the level of sulphur allowed in imported fuels this year, but the cap is still 10 times above what health campaigners urge, oil trade sources said yesterday.

In oil-for-product exchange contracts, Nigerian National Petroleum Corporation, NNPC, has asked for diesel and gasoline at a maximum of 500 parts per million, ppm, sulphur, the trade sources said.

NNPC had in 2018 outlined a plan to gradually cut the allowed sulphur to 50 ppm for diesel and 150 ppm for gasoline by the end of 2019, from 3,000 ppm and 1,500 ppm, respectively.

About 40 companies have been shortlisted for the contracts, known as direct sale, direct purchase (DSDP) and have until the end of yesterday (Thursday) to submit their pricing to supply the fuels, the trade sources said. The contracts are expected to begin in late August or September.

Nigeria depends almost entirely on imported fuels due to limited and poorly maintained refineries. The country also caps prices for gasoline, which means the government would pay directly if it mandates higher-quality fuel. The United Nations Environment Programme, UNEP and health campaigners have pressed West African nations to ban fuels above 50 ppm due to evidence of significant health problems associated with the emissions. The health impacts are particularly acute in dense urban areas such as Lagos.

Experts said the new limits would change little, as few global refineries produce gasoline or diesel above 500 ppm. "Given the relatively low sulphur content of gasoline currently imported, the new sulphur limit will not have a marked effect either on quality or price," said Jeremy Parker, Head of business development with Africa-focused downstream energy consultancy, Citac.

Meanwhile, the Senate has approved $422 million payment to cover debts to petroleum marketers for the fuel subsidy programme. The government has struggled for years to make timely subsidy payments to fuel importers. The more limited cash flow during the oil price crash exacerbated the issue.

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