Fuel Subsidy Drama Raises Spectre of Hardship

The current episode of fuel scarcity is not entirely different from the previous supply crisis in Nigeria. However, what is different in the current situation, which brings in its wake, an indiscriminate pricing of petrol and the attendant hardship to Nigerians, is the seeming acquiescence of the authorities, raising suspicion about the collapse of fuel subsidy arrangement, writes Festus Akanbi

In Nigeria and virtually all over the world, the month of December is usually heralded with a profound sense of tranquillity associated with the Yuletide season. As a harbinger of a new year with the attendant hope for a better life, December is usually considered a period of celebration devoid of the stress and anxiety which might have characterised the earlier part of the year.

It is in December that most corporate organisations decide to close their accounts and reward their staff, shareholders and customers for a good performance in the course of the year. 

For manufacturers of household goods including promoters of small-scale businesses, December is usually a period of bumper harvest as families make last-minute purchases to celebrate the end of the year.

Unfortunately, the prevailing fuel scarcity in the country has turned the 2022 yuletide season into a period of extreme anguish and pain for Nigerians who are left at the mercy of the twin problem of rising insecurity and devastating fuel scarcity.

Expectedly, costs of living have shot up, raising the spectre of a higher inflation rate for the month of December.

In Lagos, with its attendant infrastructural gaps, transport fares are becoming prohibitive as well as the cost of food and other essential items, and ditto for other urban areas as movements are painfully curtailed.

Sociologists fear that as families find it increasingly difficult to cope with the rising cost of living, crime rates may be on the increase as people become confined, frustrated and hopeless.

As Fuel Nozzles Dry up

It is indeed a period when car owners have to keep vigil at fuel stations, which are dotted with endless queues as many fuel stations could not dispense the products as a result of disruptions in the supply chain. This has led the marketers to the choice of waiting for supply from the Nigerian National Petroleum Company (NNPC) Limited or to source the product from alternative markets.

For almost a month now, relying on the NNPCL for supply is like waiting for the proverbial camel to pass through the eye of the needle as most of NNPCL fuel depots are empty. The only alternative is to go elsewhere where fuel is sold far above the target prices. This has resulted in a hike in transportation costs and the loss of man-hours by businesses, particularly those within the transportation sector who have to wait for long hours to get the product.

As of last week, a litre of petrol was sold at varying prices between N200 and N300 in Abuja, Lagos, Ibadan, Port Harcourt and many other states of the federation.

The spike in price and the attendant difficulty of getting fuel naturally reflected in the transport fares, making it extremely costly to embark on inter-state journeys.

For residents of Lagos, Ogun and Oyo who had heaved a sigh of relief over the affordability of the train services, it was a shock when the railway management announced different levels of fare increase effective December 5, 2022.

THISDAY gathered that the service increased the rate for its first class cabin from N6,000 to N9,000, its business class from N4,000 to N6,000 while its most popular side moved from N2,600 to N3,600.

The Blame Game

The federal government and NNPC have been blamed by the Independent Petroleum Marketers Association of Nigeria (IPMAN) for the fuel crisis across Nigeria.

Explaining the situation in a statement last week, the Ogun State chapter of IPMAN said the federal government and NNPC have failed to make the product available for IPMAN at affordable prices. 

A statement signed by the branch’s chairman at IPMAN’s Mosinmi Depot, Femi Adelaja, indicated that PMS is not available in any of the NNPC depots, forcing the oil marketers to patronise private depots. 

Unfortunately, relying on private depot owners means Nigerians will be compelled to buy fuel at a very high cost. It was learnt that IPMAN members purchase petrol at a premium price at private depots compared to the price of the commodity in NNPC depots.

Adelaja in the statement said, “Leadership of IPMAN in Ogun State has noticed with serious concerns, the scarcity of petrol commonly referred to as petrol across towns and cities in Ogun State, with its attendant hike in the dispensing price above the federal government stipulated price. 

“Be informed that this crisis was not caused by IPMAN, but rather, the federal government and the NNPC, who have failed to make the product available for our members at affordable prices. 

“As we speak, petrol is not available in any of the NNPC’s depots across the country. 

“The few litres being sold to members of the public by our members were secured from the management of private depots in Lagos, who would sell the product to us at an exorbitant price of between N215 and N220 per litre. 

“Prior till now, IPMAN members do get our supplies from the NNPC depots at N148.17k, but since it’s not available in these depots, the private depot owners in Lagos now sell to us at a price of N215.30k, excluding the cost of transportation and other handling and overhead costs.  

The Politicisation of Subsidy Removal

With the position of IPMAN, which has never been controverted by the NNPC, analysts said it’s obvious the current crisis in fuel distribution could be blamed on the politicisation of the fuel subsidy programme. Although President Muhammadu Buhari, who also doubles as the Minister of Petroleum Resources had told Nigerians that fuel subsidy would be removed in the second half of 2023, the current scarcity, according to watchers of the unfolding development, should be taken as a precursor to subsidy removal.

They wondered why the federal government finds it difficult to remove the controversial subsidy outrightly instead of postponing the evil days. 

They maintained that the silence of the federal government on when the current scarcity and indiscriminate pricing of the product would end should be taken as a signal that the government can no longer sustain the subsidy programme and that it is silent because of the possible backlash of such disclosure on the 2023 general election.

IPMAN also attributed the current problem to the difficulty in accessing foreign exchange by marketers.

The Operations Controller of lPMAN, Mike Osatuyi, in a report said it had become necessary to inform the general public that the lingering scarcity of petrol was due to the unavailability of the product.

He alleged that the NNPC had stopped importing enough petrol to meet demand in the country.

Osatuyi was emphatic that marketers could no longer sell at the regulated price because the unsteady supply of petrol had resulted in higher prices at the depots. “We are experiencing scarcity because the product is not available.

Over the years, policies aimed at removing fuel subsidies have been met with stiff opposition and have sometimes led to widespread public protests. For instance, in 2021, the International Monetary Fund offered some recommendations that Nigeria needs to remove subsidy for the country to maintain both fiscal and monetary balances following the aftermath effect of the global pandemic.

According to a newspaper editorial, most of the arguments for the removal of fuel subsidy have always bordered on the need to free resources for education and healthcare and take necessary steps towards long-needed reforms since the country can no longer sustain the cost. 

Despite the validity of the arguments against the subsidy, the legitimate criticism against the Nigerian government is that it has done a poor job in planning for the subsidy removal and in communicating the huge costs of the fuel subsidy and the benefits of its removal to the population. Amid the trust deficit, the public perception is that of a government binging on corruption, cannot implement compensation programmes and has not made good its promises over the years. 

And in a country with a poor electricity supply, most of the fuel consumed is for generating sets in many households. At N160-N165 per litre presently, the majority of Nigerians are barely surviving. So, what will be their lot when prices and inflation soar without a buffer?

As Nigerians approach the yuletide with trepidation, the question is why is no one taking responsibility for the avoidable hardship on the general public? Why is the sole importer of petrol – the NNPC – opaque, insincere, all talks without remedial actions? At this time of scarcity, petrol marketers are also said to be pushing for a share of the subsidy’s supplementary budget of N2.557 trillion. 

Analysts said it is clear that the laid-back disposition of the current administration is at the heart of the perennial energy crisis and why subsidy has remained an albatross on the government that promised change.