Unending Burden of Fuel Scarcity Impact in the FCT

Business owners, hoteliers and transport operators, as well as most Nigerians, are presently burdened and negatively impacted by the raging fuel crisis in the Federal Capital Territory. Olawale Ajimotokan and Emmanuel Addeh, who examined some of the root causes like non-payment of bridging gap to independent marketers, product transportation issues and insufficient cost for inbuilt products per litre, report that the lingering effect on the common man and businesses in the FCT is a dilemma that needs urgent solution

For months, residents of Abuja have not enjoyed reliable supply of petrol. Although the issues are multifarious, the latest round of scarcity, according to the authorities, is caused by product transportation issues.

Many roads within the city are now routinely blocked as motorists struggle to get the product from the few filling stations that are open, as vehicular traffic stretches several kilometres as a result of the latest scarcity.

While the federal government has increased what the petrol distributors call bridging gap, which enables the movement of petrol to far-flung areas, the contention of the operators is that it is barely enough.

Given the peculiar nature of the country’s sector, products which ordinarily should be moved through pipelines are now transported by road through large tankers and diesel is required to do this.

Quadrupled Prices 

Between last year and now, diesel prices have quadrupled while other administrative charges have markedly skyrocketed. Petrol marketers have insisted that under the current conditions, they cannot sell the product at the current official price of N165 per litre since all inbuilt costs push the ex-depot price to around N163. That is the dilemma.

Protest by Independent Marketers over Non-payment of Bridging Gap 

In addition, the independent marketers maintain that they are being owed huge backlogs since the days of the Petroleum Equalisation Fund (PEF) which has now been collapsed into the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

 Penultimate week, in a communiqué read by the Secretary of Independent Petroleum Marketers of Nigeria (IPMAN), Suleja and Abuja depots, Alhaji Mohammed Shuaibu on behalf of the Chairman, Alhaji Yahaya Alhassan, he said their members had not been paid their “bridging claims” for about 12 months, amounting to over N50 billion.

IPMAN stated that the fund administered by the NMDPRA was being withheld for inexplicable reasons. The branch of the striking petroleum marketers covers Abuja, Kogi, Nasarawa, parts of Kaduna state as well as the entire Niger State.

“The Petroleum Equalisation Fund (PEF) is owing us bridging claims from 2021 till date. Therefore, all our claims should be paid without any delay. 

“About 85 per cent of our staff are being laid-off because there is no money to pay their salaries. These include pump attendants, truck drivers and other administrative staff,” the independent marketers lamented,” Alhassan said.

IPMAN stated that for instance, the marketers that had up to 10 trucks and above could no longer maintain them due to lack of payment of their bridging claims allowances by the NMDPRA which oversees the midstream and downstream areas of the petroleum industry.

Due to the payment default, the IPMAN members said the development had reduced the supply of petroleum products to Abuja and environs, since getting funding to purchase the product and maintain their trucks to transport products from the South to Abuja had become problematic.

But Farouk Ahmed, chief executive of the NMDPRA responded that the organisation had so far paid N74 billion to IPMAN as bridging claims in the last seven months.

“So far, the Authority paid N71,233,712,991 bridging claims and another N2,736,179,950.84 freight differentials to the marketers as at 6th June, 2022.

“A breakdown of payment made to marketers is as follows: Major Marketers (MOMAN) received N9,958,777,487.24, IPMAN members were paid N42,301,923,616.96, NNPC retails N6,661,459,118.61 while DAPPMAN members were paid N12,303,195,651.57, these translate to a total of N73,969,892,941.84,” he said.

NNPC’s Stance 

On its own, the Nigerian National Petroleum Company Limited (NNPC) has told Nigerians that it has enough petrol stock in the depots despite the scarcity, especially in Abuja and surrounding states.

Recently the national oil firm, assured that the country had about 1.9 billion litres of Petroleum Motor Spirit (PMS), otherwise known as petrol in various facilities in the country that could last for 32 days.

Expressing the hope that normalcy would be restored in a ‘couple of days’, the Group Executive Director, Downstream, Mr. Yemi Adetunji, who spoke during an inspection tour of the filling stations across the federal capital, had explained that the challenge was temporary.

Adetunji said that the NNPC was making every effort to ensure energy security for the country, noting that with Lagos sorted out, the company in collaboration with all relevant stakeholders will soon bring the situation in Abuja under control.

Distribution Challenge 

His position aligned with that of the National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Mr Festus Osifo, also insisted that Nigeria has a distribution problem.

In addition, the PENGASSAN leader stated that private depots were selling their products above the N148 official ex-depot price because of some inbuilt logistics, making it impossible for retailers to sell at the official N165.

“The ex-depot price of this product is N148 as of today and there are some costs that are built into it. And one of the costs is the bridging fund, which NNPC would collect and remit to the NMDPRA.

“So now at a particular time, they agreed with the truck drivers that bridging fund will be N10 per litre, depending on the destination you are going all over the country. At the time they agreed, the cost of diesel was about N250.

“But today the cost of diesel is over N700, it has tripled. So the expectation from the tanker drivers is that since the cost of diesel has gone up, instead of paying N10 you have to multiply by three,” he explained.

Effects of  the Scarcity in Abuja

The effects of the raging scarcity of fuel in the FCT are far reaching. Given that vehicle owners in the FCT are either spending many productive hours queuing for fuel at petro-stations or at black market, the dire outcome is that cost of transportation has increased by over 100 per cent.

As a result the cost of foods, goods and services has skyrocketed beyond the means of the ordinary people.

The burden of the fuel scarcity is saddled more by the poor, thereby increasing their suffering and their poverty level.

It is not only private interests that feel the effect of the current brunt. In fact, government establishments are not left of the fuel scarcity saga in the FCT.

Fear of Power Shortage in National Hospital

The National Hospital, Abuja is one of the government establishments severely impacted by the crisis. Arising from unstable electricity the management of the hospital has been depending on its generators for electricity to all the critical wards.

A source at the hospital, said the hospital management can’t in any way imagine any situation where power shortage will destabilise its operation.

Three weeks ago, the hospital, as a last recourse, heavily relied on its generators and as a result, incurred enormous bill from diesel consumption after the hospital experienced persistent outage of electricity supply.

“We have constant light but mostly, we are on generator. It is even now that the power company is bringing light a bit. Before, like two-three weeks ago, there was no light everywhere. If you were here, you would see the generators humming. We are on generator light for 24 hours because here, we can’t do without light in the hospital,” the source said.

It was gathered that all the critical wards in the hospital that run with machines, like the Intensive Care Unit (ICU), Mortuary, Dialysis unit, IVP Unit and Trauma ward, due to their nature, cannot operate without constant light.

The fear at the National Hospital is that those units will automatically shut down, with attendant risk to patients, who are in need of critical attention. For instance, the trauma unit treats accident victims, and patients subjected to assault and knife injuries.

Rising Cost for Commercial Transport Operators

Some commercial transport operators have also decried the unending hardship brought by fuel scarcity in the FCT. They urged government to resolve the prevailing crisis as it is affecting them and the passengers.

When cornered at the Jabi Motor Pack, the Chairman of the Ibadan unit of the road union, Rotimi Akinyemi said fuel scarcity has resulted in the cost of the Abuja-Ibadan-Lagos transport increasing to N7,200.

He said although the official pump price of fuel was N165 per litre, once drivers got beyond Gwagwalada and further to the south, the cost varied from N180, N220, N250 and N280 per litre.

Akinyemi lamented the decline in the number of travelers as many passengers can hardly afford the random price increase.

“You can see that business is bad as a result of the scarcity. We are hoping for things to improve in our country because we are not happy with what is happening. I want government to urgently address the issue of fuel crisis in the country. 

“They should do something because fuel availability is at the heart of peace and insecurity in Nigeria. The suffering of the people is too much. Nigeria is awash with petroleum but we are suffering for it.

“We want our leaders to alleviate the plight of the commoners. In this country we are faced with fuel, electricity and water problems, which are basic things vital for survival of the people. Unfortunately, it is only some people who can afford them, leaving the ordinary people to their plight. The government should not appear to be helpless as a result of the situation,” Akinyemi said.

In a like manner, Ibrahim Adeniyi, who runs an intra-city taxi business in Abuja, asserted that transporters are badly hit by the raging fuel crisis.

The native of Atiba-Oyo lamented that transporters spend upward of five hours at petro-stations queuing to buy fuel and most often get the product at the Black Market above the official rate of N165 per litre because some marketers prefer to horde fuel.

Adeniyi said the fuel scarcity was biting transporters because aside from the low profit margin, the cost of spare parts has also soared beyond their means.

“How won’t it affect us? This business is barely profitable because at the end of the day many of us are left with little after paying more on fuel. Again the cost of spare parts has hit the roof. In fact, there is no spare part that is not expensive. A spare part that used to sell for N1,500 is now selling for N,3000.

“Before, we were buying one tyre at N12, 000 now it is N27,000. A new battery that was selling at N17,000 now goes for N34,000. It is only God that can help us in this country. After buying fuel you are left with little profit that can hardly feed you and your family in a day. You can’t eat a meal and be satisfied, you use pure water to support it,” Adeniyi lamented.

Confectioners Hang on a Tight Rope 

The Coordinator, Nigerian Bakers Association, North Central, Mrs Clara Ameh Oduwole, echoed similar consternation. She said bakers are barely managing to survive the current hardship so that their business will not collapse because availability of power is essential to the sustenance of the business.

She said:”In our confectionary business, fuel availability is paramount because we need to generate electric power. We need diesel for production of cake and ice cream. Unfortunately we are not breaking even. In fact, I have to buy a new generator that uses petrol.  Although petrol is cheaper than diesel, it is not available at the filling stations except at the Black market,” Oduwole said.

She said the high cost of fuel has brutally affected the cost of production as a bag of flour that was about N14,000 in December was now about N30,000. According to Oduwole, she recently brought a 50 kg gas that used to cost N14,000 last year for N45,000.

 “There are so many factors that we don’t know where the problems are coming from but we have to find alternative,” she said.

In response to the anxiety that bakers were resorting to price hike as a result of the high cost of production, Oduwole asserted that bakers were not hiking prices of their products because of increase in cost of production.

“You know in marketing when there is inflation you are going to make less profit to make your business relevant. You can increase your profit but not at the same rate as the cost of production.

“I try to focus more on things that are in higher demand from our buyers. Bread and cake are luxury. The demand for cake has reduced but people will still wed while organisations are buying. And it is for that reason that we are still in business,” she said.

She appealed to government to ameliorate the plight of SMEs by being responsive and by also having a listening ear as the fuel scarcity is having a harsh effect on bakers.

Hospitality Industry Groans

In his perspective, the General Secretary of Hotel Owners Forum Abuja (HOFA), Enofiok Ekong attributed the survival of some hotel businesses under the current hostile fuel regime to sheer grace of God.

Ekong, who is the owner of Value Brand Hotel, Area 10, Abuja, described the fuel scarcity as terrible and bad for HOFA members. He said many of them are merely struggling to remain in business as they cannot they pay their workers’ salary.

He said most of the hotels that used to run at 50 per cent before were now operating at 20 per cent. He added that it was the 20 percent that the hotel owners were using to buy diesel, pay for the bar and pay salary.

“It is not interesting at all. It is very frustrating,” Ekong said, adding many hotels have also folded up as a result of biting cost of operation.

“Before, we were buying diesel at N150 per litre which then was okay considering you can afford to run your generator for 24 hours because it had not eaten your cost but now we are buying it at N800 per litre. So a 100 litres will be N80,000 and the 100 litres, if anybody is running anything inside, the whole amenities in the room, cannot last you more than four hour. That means you have to top another 100 litres again.

“In a month, some hotels borrow about N2.5m, if not N4 million, depending on the size of the hotel and number of rooms. That means in a month you are spending out of what you are suppose to be making as profit. Don’t let us even talk about power supply—there is no light. Some people run their generators 24/7. Salaries that you suppose to pay at the end of the month you can’t.

“In the past, in a week, we used to see 10 guests, but because of the insecurity and hardship in the country we are managing just two guests. And that two guests are what you are going to use to buy fuel, pay salary and electricity bills that will come at the end of the month,” Ekong said in a tone tinged with rage.

He said although HOFA as a body tried to convey their stance to government by writing to the National Electricity Regulatory Commission (NERC) on why increasing electricity tariff was unfriendly to business, the commission ignored their pleas and went on to increase electricity consumption bill.

“In April when we did not have light, our electricity bill actually increased. But we are law abiding citizens, we can also follow the Manufacturers Association of Nigeria (MAN) and the bakers association that have threatened to shut down everywhere because of business. Imagine if all hotels decide we will close our doors –if anybody comes they won’t stay-but then again you have to show human face to some things because there are some people who depend on that money to feed their families. We just need to keep finding way to remain in business,” Ekong said.

Quotes

Before, we were buying diesel at N150 per litre which then was okay considering you can afford to run your generator for 24 hours because it had not eaten your cost but now we are buying it at N800 per litre. So a 100 litres will be N80,000. In a month, some hotels borrow about N2.5m, if not N4 million, depending on the size of the hotel and number of rooms

In our confectionary business, fuel availability is paramount because we need to generate electric power…Unfortunately we are not breaking even. In fact, I have to buy a new generator that uses petrol.  Although petrol is cheaper than diesel, it is not available at the filling stations except at the Black market