Nigeria is Africa’s top oil exporter but a shortage of dollars has provoked a fuel crisis that is testing an already struggling economy and challenging the government to find a solution.
The west African nation has long suffered fuel shortages because it lacks the infrastructure to refine its crude at home. As a result, it imports almost all of its petrol and other refined products — paying in dollars.
People have been experiencing frustration at the pumps since early March because neither NNPC, the state-owned oil company, nor private competitors have the dollars needed — about $10m per day in total — to pay for imports. While fuel shortages are usually resolved in one or two weeks, the current crisis has been prolonged and could drag on.
“Things are really getting out of hand,” shouted an irate driver in Lagos, the commercial capital, this week as he attempted to squeeze his sedan past a queue of vehicles stretching several kilometres to a petrol station. The queue had blocked traffic in all directions around the NNPC-owned station in Ikoyi, one of the wealthiest neighbourhoods in Nigeria.
Another driver, who gave his name as Mr Ayo, said he had been waiting seven hours since 3am to fill up. “I voted for change and all I am seeing is frustration day and night,” he said.
President Muhammadu Buhari, who took office in May last year, has vowed to change the way the state buys refined petroleum products and improve the poor performance of state refineries to lessen dependence on imports. But such reforms could take months, if not years.
Nigeria’s foreign reserves have been falling since the price of oil, which provides 90 per cent of export earnings, began to plummet in mid-2014. The central bank imposed currency controls last year to conserve reserves, but they have had a limited impact as the bank has also continued to spend dollars defending an official peg for the naira.
The dollar crunch has forced multinationals such as Unilever and Guinness to raise prices and even prompted Truworths, the South African retailer, to leave Nigeria in February. It is now also damaging Nigeria’s ability to import fuel.
Fuel importers and marketers say they cannot access dollars at the official exchange rate because of the currency controls. This forces them to buy dollars at a higher rate on the black market, which then makes it uneconomic to sell their imported fuel at a pump price fixed by the government.
Emmanuel Ibe Kachikwu, NNPC’s managing director, provoked public anger when he said last month that he was “not a magician” and that the long queues at petrol stations were likely to persist until May.
Mr Kachikwu has since changed course, promising fuel supplies would improve by the end of this week. However, energy industry executives say Mr Kachikwu was simply being honest about the complexity and scale of the problem in his initial comments.
“The government is trying but the problems on the ground are colossal and I think they underestimated them,” said the head of a Nigerian oil and gas company, who wished to remain anonymous. He noted that when Mr Buhari took office he promised to get Nigeria’s state refineries working within just two months.
[b]All four state refineries are shut. One had been running in January [/b]but a pipeline attack by suspected militants in the oil-rich Niger Delta forced the government to cut supplies and halt operations.
The fuel crisis is further hitting productivity during the worst economic slowdown in 15 years. “Many people cannot get to work on time or at all, because either they cannot get fuel for their cars or they cannot afford higher transport costs,” said Muda Yusuf, head of the Lagos Chamber of Commerce.
The fuel saga — fuel wahala in Nigerian slang — is a reminder for some impoverished citizens of their country’s stark inequalities.
“We have oil but we don’t succeed to have fuel. We suffer for this oil,” said Adeshino Gbengba, a minibus driver queueing at another Lagos petrol station, while he watched a police officer allow people to jump the line in exchange for money and soft drinks.
Nigerians queueing at petrol pumps and shelling out extra cash for black market fuel have another gripe: electricity blackouts that are even worse than usual.
For more than a week, some neighbourhoods in Lagos have been running almost entirely on residents’ generators because the official grid’s power production has slumped. But many people cannot afford or even find fuel for their generators and are sweating through humid nights without fans to cool them.
Nigeria is home to about 180m people but its national grid typically produces far less power than most European cities. Generation had begun to improve under Mr Buhari’s administration — it crossed the 5,000-megawatt mark daily in February, a record high.
But in mid-February, armed men in the Niger Delta attacked a pipeline that also supplied about 25 per cent of the grid’s gas supply, said a senior official in the ministry of power, works and housing. Generation is now around 3,300 megawatts, experts say.
The government hopes repairs by Shell, the pipeline’s operator, will be completed in May. In a moment of exasperation, Femi Adesina, the presidential spokesman, said in a television interview that Nigerians “crying that they are in darkness” should blame the pipeline vandals and not the government.
Source: https://next.ft.com/content/b0f9739a-fb3c-11e5-b3f6-11d5706b613b 1 Like |
