Why Fuel Queues Persist

Chineme Okafor, in Abuja, writes on why queues at filling stations have refused to go in most states and what is being done to address the issue

“This is probably the most challenging issue since I took over as GMD and Minister of Petroleum, and the reality is that a lot of us even within the Company (NNPC) do not know why this is so and so for those who don’t know, I’ll first go through why you have this situation,” said the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, in a podcast message to workers of the state oil firm, the Nigerian National Petroleum Corporation (NNPC) Friday on Nigeria’s fuel scarcity which has gone on for months now.

In trying to explain to the workers the reasons why there is still scarcity of petrol and long queues of vehicles at service stations across the country, Kachikwu said that the situation was not an accident.
He went on to list some of the factors that had overtime contributed to keep the situation at the level it is now.
Kachikwu attributed past huge subsidy debts, shortage of foreign exchange for oil marketers to import petrol, subsequent drawback of private oil marketers to import under such unfavourable condition and the heavy burden which all of these have imposed on the NNPC, as the reasons why petrol scarcity has lasted this long in the country.

“First, on resumption in August, we had a very major problem on our hands. Because subsidies, N500 billion, close to N600 billion, hadn’t been paid over a one year period, and so the majors, everybody who was importing had begun to very quietly reduce the levels of importation that they had,” he added.

According to him, “and although I struggled very hard and got the Assembly approval and the President’s approval to eventually pay a good portion of that subsidy somewhere in November, by then it was too late.”

Too late, he said, “because although they (marketers) got the money, they didn’t have access to foreign exchange so the critical reason, main critical reason why you have this supply gap today is that although NNPC has its own 445,000 barrels allocation of crude and is meeting its own, the individuals who should provide the balance are not bringing in any product.”

Usually, the NNPC provides about 40 per cent of the country’s daily consumption capacity of 40 million litres of petrol while other marketers make up the balance of 60 per cent. Since the marketers have been unable to access forex even with their past subsidy payments, Kachikwu said the NNPC has been shouldering the nation’s petrol needs singlehandedly.

He also said in doing this, the corporation has tried to devise innovative means, but these means eventually failed it because it didn’t have the capacity to go that solo run.

“And so, we’ve had to be very creative over the last four and five months, until we basically ran out of options and the sort of creativity that we put in the space was forward buying, forward purchase, forward crude allocations, and also, just to bring in more product, because we saw NNPC transit from a 45 per cent provider to suddenly 80 per cent, and about this month really to 100 per cent provider of petroleum products in Nigeria,” the minister stated.

While indicating that it is indeed a miracle that the country’s petrol supplies had not dried up and the country perhaps shutdown from lack of energy, he said: “That was not sustainable, we didn’t have the capacity, we didn’t have the funding, we didn’t have access to the products, we didn’t have the foreign exchange. So, in very many ways, it’s surprising that we’ve even been able to survive this long.”

Although he had overtime given contradictory timelines when he expects the scarcity to end, Kachikwu however said that there are key elements that would need to be done to overcome the present situation.

The country, he noted would have to find a way to provide forex for oil marketers to import products, fix her pipelines networks which integrity have been greatly impaired, and throw private initiatives (deregulate) to the downstream sector as a long term solution.

“So, the key element has been, how do we find foreign exchange for those who eagerly want to participate in the stream, who have been doing this traditionally, to get into the space, buy their products, come in, distribute. That’s something we’ve had to work on,” he said.

He also noted: “Of course, the second problem was incessant pipeline disruptions. Literally, if you look at the statistics of this year, versus last year, we’ve had almost two times the number of pipeline interventions and disruptions than we’ve had over the last two, three years, in this year and that for us is very disturbing.”
“Now, we’ve thrown a couple of ideas on this. The first thing that I have tried to do is, for the first time in this country, I have been able to convince the upstream companies to provide some forex buffer over the next one year for those who are bringing in products.”

In that regard, Kachikwu disclosed that he has tied, Total Upstream to Total Downstream, Mobil Upstream to Mobil Downstream, Agip ENI to Oando, and Shell to Conoil, thus putting $200 million of forex availability out for the marketers to import products.

He also said that he has made some inroads into the Central Bank of Nigeria (CBN) to get some more forex allocation to marketers to help stabilise the situation.

All these, he said are expected to begin to impact positively on the situation, “because fuel queue, don’t make any mistake about it, is the single most difficult item, which if not solved can bring down the polity and can create a mayhem here.”

He said that the pipelines are also being recovered to ease the free flow of crude oil and products to their destinations.

“What that has done is that for the first time in over eight years, we’ve been able to capture back system 2B all the way to Ilorin. For the first time in over six years, we were able to pump crude from Escravos into Warri and we were able to pump oil from Brass into Port Harcourt.

“And we were able to pump from Warri right into Kaduna, with a few skirmishes here and there. This is the first time in over 10 years we’ve been able to accomplish this. We accomplished this by not spending money, but owing obligations,” he said.

But even with the biting situation, Kachikwu still remained hopeful that the end is quite near.
“So, it’s been a very difficult work, very challenging, we’re getting to the solutions, the first few cargoes are beginning to come in and I think by the second week of April like I said, we should be hopefully out of this queue situation,” he said while urging the corporation’s workers to take up the gauntlet and help him overcome the situation.