FROM THE BLOGOSPHERE: WHY DO WE SUFFER FUEL SCARCITY IN NIGERIA?

1. We do not have enough refineries to satisfy our domestic need, so we depend on fuel importation

2. Fuel is bought at the international market with US dollars and importers need USD to buy and import fuel

3. There is variability up to N121 bewteen the official USD exchange rate and the parallel market rate in Nigeria.

4. The government determines the price for fuel because the CBN is the only source of US Dollars for Marketers who import fuel.

5. If marketers source for dollars themselves, they cannot sell the product at the government price because of the N121 difference.

6. When the CBN gives US dollars to importers to buy fuel and import, they opt to selling the US dollars in the parallel market since they will make more profit, say about 50 times more than buying fuel and importing.

7. Most of the few marketers and dealers who use the dollars they got from CBN to buy fuel and import, divert the fuel to neighbouring countries like Chad and Benin Republic etc because fuel costs more in these countries since their Petroleum Market is free, and they will sell at a higher price and make more gains.

8. The CBN as a result of over 60% decrease in the price of crude leading to a reduced foreign reserve cannot afford to give enough dollars to marketers and dealers to import enough quantity of fuel for domestic consumption in the midst of all the leakages

9. These factors combined with a few others always lead to a shortage in the quantity of fuel that will satisfy Nigerian domestic consumption.

WHAT HAS THE MINISTRY OF PETROLEUM DONE?

1. Stopped the CBN from giving USD to marketers and dealers and gave them freedom to source for foreign exchange in the parallel market

2. Allowed the pump price of fuel to reflect the international price of fuel using the foreign exchange at the parallel market

3. Given all marketers and dealers the right to buy and import fuel while sourcing for foreign exchange from the parallel market

WHAT WILL BE THE IMPACT OF THIS?

1. Marketers and dealers can no longer collect dollars from CBN and sell at the parallel market instead of importing fuel and then causing fuel shortage

2. Marketers and dealers can no longer divert fuel to Chad, Benin and other neighbouring countries since they will not make extra profit in doing so

3. Everyone can now buy fuel and import. There are no more cabals in the Petroleum industry. Anyone can join and do business.

4. More fuel will be brought to Nigeria and there will be competition among marketers that fuel stations will be begging and giving incentives to customers to buy their fuel

5. Competition will drive down the price of fuel as seen in the case of diesel.

6. Government will use its
resources and time to develop infrastructure.

This is the choice we have to make now that we have a Government that we can entrust our resources to and go to sleep.

Nigeria Is Progressing. FTC

It is a matter of time, an egg will walk!