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Finding permanent solution to fuel scarcity

Finding permanent solution to fuel scarcity

The national embarrassment that current fuel scarcity in Lagos, Abuja and some other parts of the country has constituted is no longer funny to the affected Nigerians, more so that the lingering problem has practically become a permanent feature of the country.

Regulatory stakeholders starting from the de facto Minister of Petroleum Resources and the Nigerian National Petroleum Corporation (NNPC) should be ashamed of the turmoil they have perpetrated, and their inability to find a lasting solution.

Even though fuel supply improved somewhat over the past few days, the marginal improvement came with an unofficial price increase that has forced motorists to pay at least N180 per litre at some selling points, instead of the approved N165. It is an understatement that the current round of fuel scarcity has put pressure on the citizenry amidst the gruelling economic and social hardship.

For more than two weeks now, residents of Lagos have joined those of the Federal Capital Territory, Abuja among others, to suffer untold hardship following the acute fuel scarcity that has resulted in long queues of vehicles resurfacing at petrol stations; hard times for many who depend on generators to power their businesses and homes, a situation complicated by the absence of power supply amidst collapsing national electricity grid. And as transporters double their fares, there is a spiralling effect on the prices of goods and services. Black market sellers are having a field day, selling petrol for over N200 per litre.

Furthermore, petrol stations selling above the N165 do not reflect it in their pump while several filling stations are shut following speculations of a possible price hike. But President Buhari has stated that the pump price remains N165/litre.

This development is shameful considering that Nigeria is one of the six leading oil producers and exporters in the world, a fact President Muhammadu Buhari once underscored when meeting with stakeholders. But lamentations are not enough. In addition to the new mandates for more imports, the Buhari-led government should set to work immediately on a long-term scheme that will not only end scarcity but ensure the refining of enough petroleum products locally for Nigerians’ consumption. The corruption-ridden importation, which has hampered local refining, is the bane of fuel supply.

As usual, the recurrent scarcity that is disruptive to the economy is attributed to the controversial billions of naira in subsidy being paid to some importers and oil marketers. The issue has often generated heat and altercations and charges of economic crimes against the state. However, the subsidy issue appears overstated as it manifests too much opaqueness in the operations of the oil sector as the national oil company. The NNPC has not been seen to be fully committed to service delivery in the sector. Sundry middle-men and fly-by-night contractors have taken advantage of the murky business style of the corporation to fleece the nation of billions. The result is that Nigeria is perhaps the only oil-producing nation that imports refined products for local consumption.

Whenever the pains of scarcity begin, there are usual speculations about likely causes, claims and counter-claims by operators and regulators. But one constant fact is that scarcity is not often due to product non-availability but the general increase in the overall cost of importing the product, which usually affects marketers who are always without the required capital amid complaints of unsettled previous loans from the banks.

Besides, there have been excuses that the new foreign exchange (Forex) policy has hampered marketers’ ability to raise funds for the importation of products as they struggle to secure outstanding subsidy claims from the Federal Government. Even as NNPC always assured consumers it is doing everything possible to make petroleum products available soon, it is feared that the current scarcity might worsen unless the authorities take measures to close the demand-supply gap.

Curiously, there is no more debate about deregulation, as NNPC has opted for what it calls “the more efficient Direct Sale-Direct Purchase (DSDP) alternative.” This allows for the direct sale of crude oil by the NNPC and direct purchase of petroleum products “from credible international refineries.”

Meanwhile, importers are crying out that the Central Bank’s new foreign exchange policy has worsened matters as they find it pretty difficult to import the 25 per cent allocated to them. The marketers and indeed other stakeholders are wary of the new monopoly while Nigerian fuel consumers are enduring untold hardship. There is, therefore, a sense in which Nigerians can look in the direction of the NNPC for an explanation or better response to the current persistent energy crisis.

What is more, electricity distributors have also fingered scarcity of gas to their installations as part of the near-total darkness being experienced all over the country. So, the demand for petroleum products has been pushed a lot higher as a result of the need to power private fuel generators, thus compounding the harrowing agony of the people.

This, however, is the time for pertinent questions to be asked of the Nigerian authorities. What has happened to the refineries the NNPC claimed had been turned around to complement import? What impact has the recently enacted Petroleum Industry Act (PIA) had on fuel supply? The law, passed after about a decade of debate, was meant to overhaul the nation’s oil industry; is it doing that? What about the modular refinery development strategy that was meant to leverage local refining? Why is it not operational yet, and is there nothing to be done about that?

Certainly, enough excuses have been offered for the fuel scarcity in the country and enough damage has been done to the people’s well-being. This national shame can be ended by the present administration if it shows a greater commitment to governance and the interest of the people.


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