Nigeria’s auto industry loses $10bn yearly to petrochemical, steel deficits

 

Government’s failure to revive steel companies and equally develop indigenous petrochemical plants have stalled the local automotive development agenda, leading to loss of $10 billion yearly to large scale importation of fully-built motor vehicles and allied components used for local assembling.

For instance, steel accounts for about 60 per cent of raw materials used in automobiles, while petrochemicals are used for plastics and foam used in vehicle interiors.

Despite being an oil-producing nation, non-existent refining capacity continues to undermine the country’s capacity to provide feedstock for allied industries.

In the alternative, local manufacturers are heavily dependent on imported spare parts, put at 80 per cent of the entire vehicle components and valued at over $10 billion (about N5 trillion) in capital flight yearly.

The Federal Government had introduced the National Automotive Industry Development Plan (NAIDP) in 2013 to revive local assembling and car manufacturing over a period of time. But more than seven years after, the local manufacturing dream remains aspirational.

Globally, the presence of refinery connotes petrochemicals that go into spares, among others. With the exception of the Indorama Eleme Petrochemicals Company (IEPC), local refineries, with total installed capacity of 445, 000 bpd have remained obsolete and currently process zero crude, while recording massive losses.

The Guardian learnt that Warri and Kaduna Refineries have abandoned any plan to put their petrochemical components on stream due to their obsolete state.