Fuel Scarcity: Why The Monster Will Continue To Rage

Fuel Scarcity: Why The Monster Will Continue To Rage
By Juliet Alohan
— Nov 29, 2015 4:23 am | Leave a comment
The beneficiaries of the corrupt regime of subsidy are the powerful few; while the losers are the hapless millions of Nigerians including a hobbled national economy and broke governments at all tiers Juliet Alohan in this report x-rays all what the government is doing to ease the choke grip of fuel scarcity in the country
Although the long fuel queues which resurfaced across the country have begun to thin out in some places, the recurring situation has become a source of great concern as Nigerians wonder whether there would ever be a lasting or permanent solution to the challenge.
The hardship faced by Nigerians during such dreaded periods can only be imagined. From increased transportation fares, to stranded commuters at various bus stops and precious hours wasted on queues by motorists. The increased transport cost usually comes with a spiral effect that see increases in the cost of food prices and all domestic items. Its frequent recurrence has become unbearable for Nigerians who are now a people suffering in amidst huge endowment.
Before seeking for lasting solution to this challenge, it is instructive that we determine how we got here in the first instance. For a country richly blessed with crude oil and one of the world’s largest oil producers, to become dependent on fuel import, is an irony that beats the imagination.
Factors Fueling Fuel Scarcity
Nigerian National Petroleum Corporation (NNPC), Dr Ibe Kachikwu
Nigerian National Petroleum Corporation (NNPC), Dr Ibe Kachikwu
According to the Nigerian National Petroleum Corporation (NNPC) and its downstream subsidiary, the Pipelines and Product Marketing Company (PPMC), pipeline vandalism is one of the major reasons behind recurring fuel scarcity.
Vandalism, the NNPC maintains, poses a challenge in the products distribution and supply chain. The corporation maintains that due to its inability to transport products through the pipelines, it has, in the last couple of months, been forced to move cargoes by vessels, a development it said, is not a preferred mode of supply.
Another factor identified, is hoarding and diversion of products by some oil marketers. The NNPC claims that despite the challenge of pipeline vandalism, it has however, continued to load more products than it has in the past using vessels and trucks, but said, hoarding and diversion makes the already bad situation worse.
Another factor fueling the scarcity of petrol is the near comatose state of the nation’s refineries. The refineries with a combined daily output of 19million litres, presently operate at less than 20 per cent. In fact, at the moment only the Port Harcourt refinery is operational, while the Warri and Kaduna refineries are down.
Although licenses have been issued for the construction of new refineries, but with the market being regulated, investors have been skeptical to invest in new refineries in the country, except perhaps, Aliko Dangote of the Dangote Group, whose refinery is billed to come on stream in Lagos between 2017 and 2018.
The Petroleum Industry Bill (PIB) which is intended to define the market and bring clarity as to how the market would be run is yet to see the light of the day after years in the making.
Another major factor fueling the scarcity challenge is that of outstanding fuel subsidy payment to oil marketers which is now to the tune of N423 billion.
As a consequence of the debt, marketers have mostly stopped importation of fuel leaving the NNPC, as the sole importer and importer of last resort. According to the marketers, unless their debts are paid they would be in no position to continue importation as they have exceeded their credit limits at the banks. The banks, they say no longer lend to them unless their outstanding commitments is serviced.
New Initiatives
Against the foregoing, the NNPC says it has now taken some new initiatives in addressing the challenge, which includes the setting up of a leaner and more efficient PPMC. The organisation also said it has adopted a method of distributing lists of its daily delivery of fuel, station by station and depot by depot.
According to the executive director, Commercial, PPMC, Justin Ezeala, the NNPC’s 513 retail outlets across the country will constantly have products as a matter of priority. Furthermore, most of the mega stations now operate for 24 hours and where for security reasons this is not feasible, they operate for extended hours so as to provide the opportunity for more people to buy the product.
Also, due to the significant challenge of supply in the northern part of the country, which had to be supplied by trucks following incessant attacks on the pipelines, the corporation said, it has now established loader points in Warri and Oghara. This has now made transportation easier to the North as compared to having to transport from Lagos.
“So instead of from Lagos where it will take about three to four days for a truck to arrive, from Oghara and environ, we will shorten that by half, that is part of the packages we have put in place at the moment,” Ezeala said.
Rallying Marketers Support
As part of its strategy, the corporation says it has secured the commitment of oil marketers to support measures put in place by the federal government to restore sanity to the fuel supply and distribution condition.
At the end of a strategy session, convened by the minister of state for Petroleum Resources, Dr. Ibe Kachikwu, to address the fuel situation, members of the Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association (DAPPMA) and the Jetty and Petroleum Tank Farm Owners of Nigeria (JEPTFON), all pledged in unison to end the fuel queues as soon as possible.
Kachikwu who declared the session open, charged the marketers to pick up the gauntlet and activate all necessary machinery and mechanism to guarantee unimpeded distribution of petroleum products across the country.
While pledging to eliminate all bottlenecks to fast track the process, Kachikwu urged the oil marketers to see the initiative as a national call to action, disclosing that the NNPC had to urge the Petroleum Equalisation Fund (PEF) and the Petroleum Products Pricing Regulatory Agency (PPPRA) to be a bit more flexible with the rules to allow for more movement of trucks and products massively.
The secretary general of MOMAN, Femi Olawore, noted that the majors are willing and ready to work with the Petroleum Ministry and the NNPC to restore normalcy in the fuel supply situation.
He said, “For us there is only one thing that we know how to do and that is to sell petroleum products in accordance with the law. For us it is just a matter of few days before we get to normalcy.” Olawore said, even as he noted that MOMAN will never do anything that is against prevailing regulations on the supply and distribution of petroleum products.
Also speaking on behalf of DAPPMA, Dapo Abiodun, pledged the commitment of his members to work towards the achievement of federal government’s objective in ensuring free flow of petroleum products across the country.
This is even as the chairman of JEPTFON, Ifeanyi Uba, while pledging the readiness of the petroleum tank farm owners to support the initiative, called for government assistance in clearing the perennial gridlock at the Apapa loading gantries.
Partnering Security Agencies
As part of the new measures to check fuel scarcity, the NNPC has engaged the Department of State Services (DSS) and Economic and the Financial Crimes Commission (EFCC) with a view to checking the hoarding and diversion of petroleum products by some marketers it described as “unscrupulous”.
The engagement of the security agencies according to the corporation, is also meant to assist in the monitoring of nationwide fuel truck-out to retail outlets.
Providing insight on the role of the security agencies in curbing product diversion, the PPMC managing director, Mrs. Esther Nnamdi-Ogbue said the DSS and EFCC have been mobilised to bring to book any marketer involved in sabotaging the efforts of the federal government in making petroleum products available to motorists across the country.
“We have invited the EFCC and DSS to join us in this campaign of monitoring the movement of petroleum products and they have our mandate to sanction any errant marketer. Enough is enough,” she said.
Kackikwu assured of quick payment of subsidy, owed marketers to allow them resume importation and augument what the NNPC brings in, informing that President Muhammadu Buhari has approved the payment.
Already the president has sent a supplementary budget to the Senate for approval, which is intended to cover subsidy debts and other requirements of the federal government.
“I am sure within the next one or two weeks, this will be done and the president is looking at shorter ways to get this done and once we get the Senate’s concurrence even if the approval for the extra budgetary allocation has not come, the president will authorise the Central Bank of Nigeria (CBN) to pay the money.
“We have made provisions already and have gotten the approval out of the executive but require the process of going through the legislature, we just don’t spend money that way, we are a process-driven organisation and country, so that is what is happening,” Kachikwu told journalists in Abuja.
As a measure to deter hoarding, the petroleum minister has also instructed the free sale of fuel at any filling station found hoarding the product in addition to sealing off of such station.
“I have also instructed the Department of Petroleum Resources (DPR) as they proceed, that any station that has products and is hoarding, that they should sell all the products in there for free to customers who are out there and impose serious penalties on the stations. Sealing them is not the answer but penalising them, and I hope the message goes out loud and clear,” Kachikwu warned.
Meanwhile, Kachikwu has said that Nigeria would have to find a long-term solution to the frequent scarcity of petrol in service stations across the country, saying that the country cannot continue on the same path.
He explained that if left unattended to, the reoccurring conditions of petrol scarcity would persistent in the country to the detriment of the citizens.
He noted that he was working with President Buhari who is the substantive Minister of Petroleum Resources, to find long term solutions to the situation.
According to him, if the systemic issues are not dealt with, the challenge will continue to repeat itself. “So long term answer is simple, we have got to look at the pricing dynamics and see how we can sustain supply at this sort of current environment.
“We have got to look at whether we have enough budgetary provisions to deal with these issues but I am working very closely with the president who is in charge of the ministry and takes very direct interests in the sector, we are going to find solutions to all of this,” Kachikwu further