Business

Nigeria to take delivery of N240.9bn crude palm oil

Amid trade restriction and influx of adulterated produce, importers have ordered 670,000 tonnes of crude palm oil valued at N230.09 billion ($484.4 million) from Thailand, Malaysia and Indonesia to meet manufacturers’ demand.

 

Findings revealed that the global price of the commodity went up from $580 in 2020 to $723 (N343, 425).

 

However, at the local market, while a tonne is sold for N1.04 million, foreign palm oil goes for N343,425 per tonne, which is 67 per cent cheaper than the local produce.

 

It was gathered that industrial demand had reached 1.1 million tonnes per annum since 2018, leadinjg to scarcity and adulteration of the produce. In order to boost local production, the Central Bank of Nigeria (CBN), in 2015, added palm oil as one of the items not eligible for forex through the Nigerian interbank market in order to encourage local production, while the Nigeria Customs Service (NCS) charge 35 per cent duty on crude palm oil imported through the ports. Despite the measures, the country took delivery of 240,000 metric tonnes of crude palm oil valued at N65.4 billion ($139.3 million) between January and December, 2020, from Malaysia alone.

Regardless of the importation, a litre of the produce is sold at between N1,000 and N1,200 in the local market, while 50 litres go for N52,000.

 

However, it was revealed that some tonnes of the smuggled produce from neighbouring Benin Republic had been adulterated in order to maximise price.

This year, data obtained from Nigerian Ports Authority (NPA)’s shipping position revealed that a total of 47,699 tonnes was discharged in the country in January 2021.

 

At the Lagos Port Complex, MV Philoxenia offloaded 12,699 at Apapa Bulk Teminal Limited, while MV Gulf Mishref discharged  25,000 tonnes at ENL Consortium terminal. Also, at Josepdam Terminal, Tincan Island Port, Ardmore Sea Lion offloaded 10,000 tonnes.

 

Besides, illegal cross-border smuggling of palm oil from Benin to Nigeria, according to United States Department of Agriculture (USDA), has reached 250,000 tonnes, creating adverse impact on local producers as local demand reached 1.5 million tonnes in Nigeria, while local production stood at 900,000 tonnes.

 

Also, PwC report revealed that over 400,000 metric tonnes valued at over $300.4 million was smuggled into the country in 2017 through neighbouring borders, thereby leading to loss in revenues to government in the form of import duties.

 

However, the National Palm Produce Association of Nigeria (NPPAN) had complained that some of the smuggled produce infiltrating Nigerian market were adulterated crude palm oil (CPO), saying that local producers were losing about $500 million annually. Between January and May 2020, Malaysian Palm Oil Board (MPOB)  exported 113,000 metric tonnes of crude palm oil, while a total of 127,000 tonnes were ferried in the form of CPO/palm olein to Nigeria.

 

However, it said that the volume was about 13.2 per cent lower compared to the same period last year because of corona virus outbreak, adding that in the last five years, average Nigerian palm oil import was 1.31 million tonnes per year because of the sharp drop in local palm oil production in the country.

 

It would be recalled that in July 2020, Malaysia introduced a 100 per cent export duty exemption on crude palm oil (CPO) to woo Nigerian importers.

 

Worried by the massive importation of the produce, the Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, in 2019, complained that Nigeria still spent $500 million on oil palm importation annually despite being the largest producer and exporter of the product in the 1950s and 1960s, controlling close to 40 per cent of the global market share.

 

However, he noted that the country barely produced up to three per cent of the global supply of palm oil, with an estimated production of 800,000 tonnes, while countries like Malaysia and Indonesia produce 25 million and 41 million tonnes of palm oil respectively. Emefiele added: “We have also become a net importer of palm

 

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