LONDON – Prospects are improving in West African lubricant markets, especially Ghana and Nigeria, according to two speakers at the ICIS World Base Oils and Lubricants Conference held here last month. When I look at the whole of West Africa, I find that two countries really stand out: Ghana and Nigeria, said Taiye Williams, managing director of Nigerian company Lubcon Ltd. Afton Chemicals Craig Stoddart concurred, saying those two countries are among the five most attractive markets in Africa.
With a gross domestic product growth forecast of 5.9 percent and a stable government, Ghana is an important gateway to the West African market, Williams said. Ghana enjoys strong trade with its neighboring countries and others on the continent, especially Nigeria and well-established South Africa. The countrys regulatory framework is highly rated by the World Bank, Williams pointed out, and the business environment is generally considered to be more favorable than most African countries.
I think the rule of law is very strong there, unlike other countries – like Nigeria, he continued. But, having said this, the market not that big. Ghanas population is 25.4 million, and its GDP reached about $40.4 billion in 2015.
Heavy-duty vehicle sales in Ghana totaled 10,300 in 2013, according to Frost and Sullivan data quoted by Stoddart, who is Aftons marketing manager for Europe, the Middle East, Africa and India. That number is expected to grow 38 percent by 2018. Dominant original equipment manufacturers in Africa vary widely by country, he reported, with Isuzu and Mitsubishi the strongest players in Ghana at 25 percent and 30 percent, respectively.
Heavy-duty engine oil specifications trend toward lower quality oils, with 67 percent of the market using products equivalent to API CF, which the American Petroleum Institute has declared obsolete, followed by CH-4 (22 percent), CI-4 (5 percent) and CJ-4 (2 percent). Viscosity grade exhibits the same quality trend: 66 percent of the market is SAE 50, 27 percent 20W-50, 2 percent 10W-XX and 1 percent 5W-XX.
The Ghanaian passenger car parc is growing at a slightly slower rate but is still expected to increase 32 percent by 2018, Stoddart said. Monograde passenger car engine oils account for about 32 percent of the market, followed by SAE 20W-50 and 15W-40 at a combined 58 percent, 5W-XX or 10W-XX at about 5 percent, and just 2 percent for synthetic.
Ghanas much larger and more tumultuous neighbor, Nigeria, has a population of 168.8 million, and a 6.8 percent growth rate is forecast for its $270.2 billion GDP, according to Williams.
Nigerias total lubricant market was 450,000 metric tons in 2015, and is expected to grow to 805,000 t/y by 2022. Total is the leading marketer, followed by Conoil; independents control about 51 percent of the market. Its a highly competitive market, Williams summarized.
The market is split at about 69 percent transport – including commercial and passenger vehicles, trains and airplanes – and 31 percent industrial, said Williams. Sixty-seven percent of the countrys 12.5 million registered vehicles run on monograde oils; 32 percent on multigrade. Synthetic is coming in gradually, he observed, nearly reaching 1 percent.
Infrastructure development is driving increased demand for heavy-duty vehicles in the country. Nearly 70,000 vehicles were sold in 2013, according to Stoddart, and the number is expected to increase 41 percent by 2018. Man and Mack are the biggest players in market, with 20 and 28 percent, respectively. Low quality specifications make up most of the HDEO market, divided among API CC (27 percent), CD (13 percent), CF (29 percent), CH4 (24 percent), and CI-4 and CJ-4 (less than 1 percent each). Viscosity grades are mostly SAE 40 (28 percent), followed by 15W-40 (23 percent), SAE 50 (12 percent), 0W-XX (9 percent) and 20W-50 (less than 1 percent). Other grades account for the remaining 27 percent.
Passenger car sales are also set to increase – 37 percent by 2018, said Stoddart. Around 78 percent of passenger car motor oil consumed in Nigeria is 20W-50 or 15W-40, though 5W-XX and 10W-XX are now around 11 percent, and synthetics have captured most of the rest of the market.
Williams speculated that Nigerians buy low quality engine oil because of a combination of cost sensitivity and lack of education. However, he says, Nigeria is seeing a turn toward better quality lubes as consumer education improves and attitudes toward equipment maintenance change. There has also been a shift in how lubricants are marketed in Nigeria, with bottles beginning to appear on shelves in shops and supermarkets. Further, the number of OEMs with manufacturing plants in Nigeria is set to increase from 15 to 45, including facilities run by global majors Toyota and Honda.
Though crude oil accounts for more than 80 percent of Nigerias exports, its blenders have been entirely dependent upon imported base oil since the Kaduna refinery shut down in 1995. No official data exists, but Williams estimates total base oil imports at 750,000 to 800,000 t/y. Six major oil companies import 35 to 40 percent of those stocks, including Mobil, Total Nigeria, Forte Oil, Oando, Conoil and MRS. The remaining 60 to 65 percent is imported by 47 independents.
In 2015, the import/export balance shifted after the government corrected the tax structure, observed Williams. Tariffs on base oils were cut 50 percent, while finished lubes saw a 30 percent increase in tariffs.
Branded base oils account for 60 percent of Nigerias base stock imports, Williams estimated, and the other 40 percent is sold as unblended lubricants. About 10 percent of imported stock is sold on to neighboring countries.
Most of the imports are poor quality base oils, Williams disclosed, but things are changing. The Nigerian government has established a committee with the power to inspect imports and ensure they meet a set of minimum standards.
Businesses in Nigeria face significant challenges. Weak infrastructure exerts a huge burden on foreign and local businesses, explained Williams. Along with crumbling roads and clogged ports, frequent blackouts create a costly reliance on generators. However, the governments Nigeria Integrated Infrastructure Master Plan has begun to address these problems, with a projected investment of more than $3.1 trillion over the 30-year life of the project.