The nature of Nigeria's energy crisis can be characterized by two key factors. The first concerns the recurrent severe shortages of the petroleum product market of which kerosene and diesel are the most prominent. Nigeria has five domestic refineries owned by the government with a capacity to process 450,000 barrels of oil per day, yet imports constitute more than 75% of petroleum product requirements. The state-owned refineries have hardly operated above a 40% capacity utilization rate for any extended period of time in the past two decades. The gasoline market is much better supplied than kerosene and diesel because of its higher political profile. This factor explains why the government has embarked on large import volumes to remedy domestic shortages of the product. The weaker political pressures exerted by the consumers of kerosene (the poor and low middle class) and diesel (industrial sector) on the government and the constraints on public financing of large-scale imports of these products, as in the case of gasoline, largely explain their more severe and persistent market shortages.
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