Fuel Scarcity: Any Respite for Nigerians?

In this piece, Peter Uzoho asks whether the setting up of a 14-man steering committee by the federal government to address the lingering fuel scarcity will yield any positive result.

One major challenge facing Nigerians currently, which has been ongoing since early 2022, is the stress of getting petrol to either fuel their vehicles or power their generators. Amid the problem of shortage of the product is the arbitrary hike of its price against the government’s approved price of about N180 per litre. This is despite the huge subsidy payments which run into trillions of naira per annum. At every filling station in the country that has petrol to sell, from north to west, east to south, there are long queues of vehicles and container-wielding crowds struggling to buy fuel amid the hot sun and rain and at high pump prices.   The pump of petrol which was selling between N162 to about N170 per litre prior to last year, suddenly started moving up to N200 per litre when the first disruption in the petrol supply and distribution system occurred in the first quarter of 2022 due to the importation of adulterated petrol into the country by the Nigerian National Petroleum Company Limited (NNPC) and its partners. Ever since, the country has not recovered from that event as the product scarcity and racketeering have ensured unavailability of the product till date.  At the moment, a litre of fuel sells for between N250 to N600 per litre depending on the location.  However, oil marketing companies have consistently blamed the shortages and price hike on the movement in market fundamentals including foreign exchange, inflation, geopolitical tensions in Europe, high cost of renting daughter vessels and the cost of trucking products to many parts of the country, partly the far north and east. 

FG’S 14-MAN STEERING COMMITTEE

Following calls by ordinary citizens and several stakeholders for the government to arrest the lingering fuel scarcity in the country, the President Muhammadu Buhari-led government last week constituted a 14-man steering committee on petroleum products supply and distribution management, which would be personally chaired by him. Senior Adviser on Media and Communications to the Minister of State for Petroleum Resources, Mr. Horatius Egua, noted that the steering committee, which has the minister, Timipre Sylva as Alternate Chairman was expected to among other things, ensure transparent and efficient supply and distribution of petroleum products across the country. However, while the government may be commended for finally waking up to the calls by Nigerians to arrest the fuel scarcity, the failure of such committees set up by the same government in the past, with different nomenclatures is enough reason to conclude that this latest steering committee may not address the problem.  For instance, the federal government had in October 2019 inaugurated ‘Operation White,’ a critical transparency initiative to be carried out by an 89-man monitoring team for the tracking of movement of petroleum products in and out of the country including importation and distribution. Sylva had while launching the `Operation White’ project in Lagos, said the initiative was geared towards ensuring transparency and accountability of petroleum product supply and distribution in Nigeria, especially Premium Motor Spirit (PMS).

The minister had stated: “It is critical that all hands be put on deck to ensure that every molecule of product imported into this country is utilised within the borders of this nation for the benefit of the Nigerian populace. This is a national imperative and a core thrust of Mr. President’s mandate for leadership of the oil and gas industry.

“Therefore, the task for us is to ensure that the petroleum products supply and distribution chain in Nigeria is completely devoid of illicit practices including oil theft, diversion and smuggling of petroleum products, which constitute economic sabotage and haemorrhage of the national revenue through high cost of under recovery.

“To do this certainly requires diligence, commitment, courage and robust partnership amongst various downstream stakeholders. There is also a dire need to instil an improved culture of transparency, accountability and efficiency in the industry, streamline our operations along best practices by championing and implementing strategic reforms at every layer of the supply and distribution chain.”

Meanwhile, other terms of reference for this new committee were to ensure national strategic stock management, visibility on the NNPC, refineries rehabilitation programme and end-to-end tracking of petroleum products, especially petrol, to ascertain daily national consumption and eliminate smuggling. To further ensure sanity in the supply and distribution across the value chain, Sylva said that he had directed the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to ensure strict compliance with the government approved ex-depot and retail prices of petrol. The minister further directed the NMDPRA to ensure that NNPC limited, which is the supplier of last resort, meets the domestic supply obligation of petrol and other petroleum products in the country. The statement stated that the interest of the ordinary Nigerian should be protected from price exploitation on other deregulated products such as diesel, kerosene and gas.

“The federal government will not allow misguided elements to bring untold hardship upon the citizenry and attempt to discredit government’s efforts in consolidating the gains made thus far in the oil and gas sector of the economy,” Sylva noted.

Other members of the committee include the Minister of Finance, Permanent Secretary, Ministry of Petroleum Resources, National Economic Adviser to the President, Director-General, Department of State Services (DSS), Comptroller-General, Nigerian Customs Service (NCS), Chairman, Economic and Financial Crimes Commission (EFCC), and Commandant-General, Nigerian Security and Civil Defence Corps (NSCDC).

Others include the Chief Executive, NMDPRA, Governor, Central Bank of Nigeria (CBN), Group Chief Executive Officer, NNPC Limited, Special Adviser (Special Duties) to Sylva, while the Technical Advisor (Midstream) to the HMSPR will serve as Secretary.

LAWMAKERS’ TACKLE NNPC, MARKETERS 

During its plenary last week, the Femi Gbajabiamila-led House of Representatives expressed its anger over the lingering fuel scarcity in the country, which has made life difficult for the citizens. The House called on the NNPC to urgently end the prolonged fuel scarcity and ease queues in filling stations in most cities in the country. It also ordered relevant security agencies to fish out oil marketers and other economic saboteurs that responsible for the fuel scarcity across the country. It mandated the relevant House Committees to investigate the matter within 48 hours and invite the relevant regulatory authority to appear before the House of Representatives. The resolutions of the lawmakers were sequel to the adoption of a motion of urgent national importance sponsored by Leke Abejide. Moving the motion, Abejide noted that NNPC Limited was the only importer of petrol in the country, noting that the National Assembly had approved money for petrol subsidy to mitigate unforeseen circumstances in the areas of shortages of the product. He recalled that for over three months, there had been persistent scarcity of petrol in many parts of the country and the situation appeared to be getting worse, lamenting that as a result of petrol scarcity, Nigerians were not finding it easy in their day-to-day activities.

IPMAN, MOMAN ABSOLVE SELVES 

While many Nigerians point accusing fingers to oil marketers under the aegis of Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Major Oil Marketers Association of Nigeria (MOMAN) in the fuel scarcity quagmire, the groups have repeatedly denied being the cause of the shortages and price increases. They claim that since do not import petrol as only NNPC does, they can only sell when the product is made available to them and also sell according to the price they buy, in addition to the costs of logistics. According to the Deputy National President of PMAN, Zarma Mustapha, NNPCL is presently saddled with importing the products and distributing them to private depots, adding that independent marketers do not have depots. “As a marketer, you will buy that product for upward transmission to where your retail outlet is. You’ll transport it yourself,” he posited.

Underscoring the chaos in the sector, he noted: “There are a lot of confusions in the industry, which the government must come in and address these confusions so that the common man can get the product for the approved price.

“We cannot buy a product between 220 to 240 naira, transport it for about N50, which is already N300, and then expect the marketer to sell to the public for N200 or N190. It is not realisable,” he maintained.

On its part, MOMAN attributed the increase in the cost of petrol to the high rate of logistics, adding that the queues at filling stations were  “caused by exceptional high demand and bottlenecks in the distribution chain”.

In a recent statement, the association noted that the major cause was the shortage and high dollar costs of daughter vessels for ferrying product from mother vessels to depots along the coast.

“Next is inadequate number of trucks to meet the demand to deliver product from depots to filling stations nationwide. These high logistics and exchange rate costs continue to put pressure on prices at the pumps.

“Over the past three months, staff and management of MOMAN companies have worked diligently at depots and filling stations to relieve the stress faced by customers through the Christmas and New year period.

“Our members have again agreed to extend depot loading hours as well as keep strategically situated service stations open for long hours to ease access to fuel for our customers”, MOMAN explained.

It added that the  “final resolution to these challenges will be the full deregulation of the petroleum downstream sector to encourage the liberalisation of supply and long-term investment distribution assets. We urge the government to work towards this end goal.”