Nigeria targets N250bn revenue from lubricants market

The Nigerian lubricants market will earn an estimated N175 billion in revenues in 2014, up from the N150 billion generated in 2013.

Principal Partner, Lubeservices Associates, Mr. Kayode Sote, disclosed this at media briefing to announce Nigeria’s first lubricant summit and exhibition scheduled to hold in Lagos next week.

Sote said Nigeria is the third largest consumer of lubricating oils, amounting to about 600 million litres or one per cent of the world total demand with gross earnings of N150 billion in 2013. According to him, revenue from the Nigerian Lubes Markets will rise to N175 billion in 2014 and has been projected to hit to N250 billion by 2015.

Giving an overview of the lubricants market in Nigeria, Sote said there are 32 registered blending plants with a total installed capacity of about 965 million litres per annum. He said the plants are all currently producing at a cumulative average of 45 per cent of their total installed capacity, adding that the cumulative assets base of the blending plants is about N20 billion, generating about N45 billion profit margin in 2013.

Furthermore, he noted that about 75 per cent of the total need of lubricating oils is produced in Nigeria while the remaining 25per cent are specialised products imported by marketing companies into the country.

He said despite the obvious contribution and potential of the lubricant market to the nation’s economy, the lubes market is awash with about 720,000 metric tonnes of base oils (240,000 metric tonnes in excess of local requirement for lubes blending, different grades and types of products both locally blended by the majors, independents, fake and illegal producers.

Sote expressed concern that the lube market has become a dumping ground for sub-standard and off-specifications imported lubes of questionable quality, adding that these infractions are a threat to the survival of the lube manufacturers in Nigeria.

He said the summit, scheduled to hold between August 19 and 20 in Lagos, became necessary in order to draw the attention of the government, its statutory agencies, public and industrial consumers alike to the challenges in the lubricants market.

Moreover, he said the forum is an opportunity to showcase the fact that locally blended lubes meet and in some cases exceed both the national and international quality standards in the choice of raw materials, product formulations, packaging, quality sustainability, performance level and original equipment manufacturers’ (OEM’s) specifications and approvals.

He listed the challenges facing the lubricant market as indiscriminate importation of base oils far in excess of the installed capacity of the operating and functional lube oil blending plants; open market attraction that encourages the importation of finished lubricants of questionable quality and standards from the far east countries; low duty tariff on base oils and imported lubes both, which are housed under the same H. S CODE “2710. 1939” and thus attract duty tariff of 10 per cent; adulteration of lubes by illegal lube blending plants; and open marketing of base oils erroneously displayed as finished lubes and easy asses to customised moulds by third party marketers of lubes.

 [This Day]