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Fuel scarcity looms over non-payment of subsidy

By Abiodun Fagbemi (Ilorin) Roseline Okere and Sulaimon Salau (Lagos)   |   04 November 2015   |   12:23 am  

NNPCNNPC eliminates middlemen, opts for direct sale of crude oil
THE return of long queues at filling stations across Lagos metropolis and some other cities like Abeokuta, Ogun State and Ilorin, Kwara State may have been triggered by the Federal Government’s alleged delay in meeting subsidy payment obligations to oil marketers.

The Guardian gathered yesterday that the fuel marketers were yet to receive subsidy payments which amount to over N300 billion.
Meanwhile, a fresh wind of change has begun blowing in the process of crude oil transactions as the Nigerian National Petroleum Corporation (NNPC) yesterday announced the cancellation of the Offshore Processing Arrangement (OPA) opting for a more efficient Direct Sale-Direct Purchase (DSDP) alternative.

The new DSDP policy, which allows for the direct sale of crude oil by NNPC as well as direct purchase of petroleum products from credible international refineries, would automatically eliminate the activities of middlemen in the crude oil exchange for product matrix.

Across state capitals like Ilorin, residents are groaning over the hardship they are going through and are urging the government to intervene. The development has paralysed socio- economic activities in the ancient town, as motorists rather than resuming at their duties’ posts spend several hours at the filling stations queuing for the PMS.

The scarcity has forced many vehicles, private and commercial, off the roads just as many pedestrians especially students are forced to trek several kilometres to and from their destinations.

Activities in Lagos and other parts of the country are being hampered following very poor supply of Premium Motor Spirit to various filling stations.

As at yesterday, consumers were forced to queue at petrol stations for hours to buy fuel at two times the normal pump price for a litre, and that’s if it’s even available.
Many filling stations were not dispensing Premium Motor Spirit (PMS) to motorists as they were shut.

Entrances to many filling stations in Lagos and other parts of the country remained shut to motorists following a sharp drop in the supply of petrol to the market. Black market prices for fuel have now risen to between N150 to N200 per litre.
The Guardian gathered that the Major Oil Marketers (MOMAN) and Depot and Petroleum Products Marketers Association (DAPMA) have ran out of stock at their various depots and they have not been importing due to the delay in subsidy payment by the Federal Government.

Also, loading activities are currently not going on at NIPCO, AITEO, Capital and Folawiyo depots, which are the most active in the Lagos metropolis.

The Executive Secretary, MOMAN, Thomas Olawore, had said the NNPC lacked the capacity to address the national demand for petrol in the long term and did not have the distribution network to drive product penetration.

But the corporation insists that it has stepped up efforts to maintain stability in the supply and distribution of petroleum products nationwide.
It said it had enough stock of petrol to service the country even as it had stepped up product distribution to marketers and NNPC retail outlets across the country.

Oil marketers, who spoke with The Guardian yesterday, said that until the Federal Government offset subsidy arrears, fuel scarcity may linger for a long time. “There are no bank facilities because credit lines are not being raised for marketers.
Speaking on reasons for fuel scarcity in the country, former Executive Secretary of Petroleum Products Pricing Regulatory Agency (PPPRA), Stanley Reginald, attributed the current scarcity to the lingering subsidy debt by the government.

According to him, about 70 per cent of those eligible to import petroleum products into the country were currently not able to do so due to lack of funds.
“The problem still remains that marketers obtain loans from the banks and when those loans are not being paid when due, it makes it difficult for us to access funds to import products that will service the country.”

Also, the Chief Executive Officer of Integrated Oil and Gas, Captain Emmanuel Iheanacho who spoke at the just concluded Africa Trading Logistic Downstream Conference said interests on bank loans to oil marketers for financing of fuel importation have grown huge, forcing banks to withhold funding.

He urged the Federal Government to use the over $6 billion spent on fuel subsidy yearly to encourage net importers of petroleum products to become net refiners of crude oil.

But NNPC, in a statement by its spokesman, Ohi Alegbe, said its depots had fuel to serve the public, blaming the resurgence of queues at petrol filling stations on rumours of an impending scarcity, and assured that it had enough products to meet the demand of the country.

Alegbe in another statement on the new DSDP policy yesterday said the new arrangement was major steer designed to enshrine transparency in the product transactions.



  • bib

    How about the refineries? Are they no longer producing?

  • emmanuel kalu

    Until we reform and end this stupid corrupt subsidy scheme, we would continue to have this marketers blackmailing Nigeria over and over again. it is just amazing how useless our leaders are. one major thing is needed to end the lack of investment in refineries and continued blackmailing by marketers. deregulate the sector immediately, let there be competition in importation, give incentive and good policy to encourage investor to invest in refineries. In the meantime, invest in modular refineries that can be build in 9 month at cheaper cost. while all this is going on, increase the ability for NNPC to import enough fuel for nation, which would be sold at NNPC retail center for a small profit margin.

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