Avoiding Fuel Supply Crisis

Photo: PixShark

Photo: PixShark

THE disruption to the economy and the excruciating pain for Nigerians occasioned by an acute shortage of fuel, mainly petrol, at filling stations nationwide the other day was totally avoidable and very unnecessary to say the least. Thankfully, government’s intervention in that debacle was comparatively swifter and more decisive.

However, in spite of claims and counter-claims of politicking over government’s prompt attention as elections close in, it is time officials address core supply issues comprehensively to ensure that such systemic failure in the supply of fuel is permanently eradicated. Nigerians should be spared the horrors of embarrassing fuel scarcity, in an oil-producing country.

As usual, the crisis is traceable to the unresolved billions of naira subsidy being paid to some oil marketers, which once generated so much bad blood in the land, and over which some persons were charged with economic crimes against the state. Much more fundamental as a national problem is the determination of where the truth lies on contentious issues like the subsidy regime that impinges directly on the welfare of the people.

By design or otherwise, too much opaqueness has characterised operations of the oil sector with the Nigeria National Petroleum Corporation (NNPC) still unable to convince Nigerians of its full commitment to good service delivery. Regrettably, all attempts to address the problem have either failed or have been too feeble. The failure or half-hearted approaches have also promoted sleaze in the sector on a large scale.

Among the excuses offered for the last supply breach is that the new foreign exchange (Forex) policy had hampered marketers’ ability to raise funds for importation of petroleum products just as they were unable to secure an outstanding N264 billion subsidy claims from the Federal Government.

From claims and counter-claims, one fact was established: that the scarcity was not due to product unavailability but the general increase in the overall cost of importing the product, which affected marketers who were without the required capital amid complaints of unsettled previous loans by the banks. Fair enough, the government seemed to have concurred, as shown by its immediate payment of some outstanding sums and the promise to pay the interest rates and the forex differentials to marketers.

As expected, Nigerians could not understand the origin of the recent crisis. Finance and Co-ordInating Minister of the Economy, Dr. Ngozi Okonjo-Iweala who alleged “unfounded speculations” insisted the scarcity had nothing to do with payment issues but more of pipeline vandalism and logistics. She supported her claims with the payment of N320.8 billion from the excess crude account in two installments, last December.

Claims of sabotage could, however, not be totally ruled out because the system has always encouraged such in the past. The claims by one marketer that the Central Bank (CBN) closed two of the forex windows being exploited for back-up funds to import products may also not hold much because the CBN has a duty to direct the economy in line with economic realities.

The independent marketers, while attributing the scarcity to the sudden hike alleged that the Federal Government has increased the lifting cost of petroleum products by six naira, making it difficult for non-major marketers to lift from Lagos.

Pipeline Products Marketing Company, PPMC, also claimed the absence of effective pipeline network due to vandals as a major challenge to fuel distribution, an increase in number of depots notwithstanding.

Certainly, all these are some leads the government can follow in tackling the recurring product scarcity and attendant crises until the subsidy monster is tamed. That, in itself is dependent on the political will to tackle corruption-related issues of which the subsidy regime is a major fact.

There are other fundamental questions. Why is it that a large part of the contentious subsidy paid on fuel imports allegedly services demurrage, which has gone up in sync with Naira devaluation associated with drop in international oil prices? How much does it truly cost to produce a barrel of oil crude for export?

In addition, can marketers’ authenticated claims and approved payments be made promptly to avoid such embarrassment as has just been witnessed?

More importantly, why has the government found it so laborious to turn around the refineries to run full steam and go a notch higher, to attract private investors towards re-engineering local production and building capacity?

Surely, the people deserve better than what they are being offered by their leaders. Never again, however, must Nigerians be made to endure the hardship of fuel scarcity.

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1 Comment
  • emmanuel kalu

    this scheme is all about looting the nigerian resources. for the amount we spend on this, we could have modular refineries across the country or in region that would be able to supply the nation. NNPC IS A JOKE. they have no intention of getting the refineries running and the govt is not doing enough to encourage the building of refineries. it is up to the people to fight for the end of this looting./