THE current hitch in the supply of Premium Motor Spirit (petrol) across the country is scandalous. As Africa’s largest crude oil producer, many months of fuel scarcity, especially during the Christmas and New Year festivities, reflects the dysfunction in Nigeria’s public administration and the economy.

But this is not new, as petrol shortages have been recurring for over three decades. Scarcity resurfaced about four months ago, and has defied all logic and solutions. The government and its agencies are clueless, making disconnected statements and uncoordinated moves. Laughably, the latest was the directive by the State Security Service to the Nigerian National Petroleum Company Limited, Independent Petroleum Marketers Association of Nigeria, Major Oil Marketers Association of Nigeria, Depot and Petroleum Marketers Association of Nigeria and other stakeholders to resolve the current fuel crisis in 48 hours!

Others “directed” by the service were the Nigerian Association of Road Transport Owners, Nigeria Union of Petroleum and Natural Gas Workers and Petroleum Tanker Drivers Union.

The secret police vowed to go after the marketers if queues did not disappear after 48 hours. The queues initially appeared to have heeded the strange directive, but the reprieve did not last as the scarcity assumed a more acute dimension and frustrated Nigerians are spending many precious hours, some overnight, at dispensing stations.
The SSS explained that its intervention was to prevent any security implications or negative dimensions that could arise from the current petrol scarcity, adding that it was being proactive by curbing what could cause incitement in the country during the Yuletide.

It is a wrong way to solve a serious national problem; a domestic intelligence service cannot decree abundance of a scarce commodity. Moreover, such agencies work covertly, and if it knew or suspected sabotage, its remit was to work with the appropriate agencies, investigate, arrest, and prosecute those who broke the law. Issuing an ultimatum it cannot enforce trivialised a fundamental economic challenge.

Marketers have been selling the product at prices ranging from N175 to N300 per litre in defiance of the regulated pricing regime, signifying an out-of-control. Some private depots in Port Harcourt, Lagos and other cities have increased the ex-depot price to N235/litre as against the approved N148.17/litre.

remittances is lost.

It has run the country’s four refineries aground but persists in sinking billions of dollars, some of it borrowed, in fruitless supposed Turn Around Maintenance. In recent years, the NNPC has been the sole importer of refined petroleum products in deals that ignite controversies over cost, and precise volume imported and distributed. Its inefficiencies are costing the country dearly. Irrationally, the government allows it to be the sole determinant of the subsidy it claims to have incurred and pays itself.

Many of its 21 fuel depots across the country are run-down. Instead, private depot owners are laughing all the way to the bank by charging exorbitant rates for storing the products leaving for marketers’ outlets on its behalf. Reports say it also owes indigenous shipowners $90 million, whose daughter vessels load the product from mother vessels berthed on the high sea for onward transfer to private depots.

The real problem is state involvement in the downstream sector and the failure to refine locally. Nigeria has capacity to produce over 2.5 million barrels of crude per day and its current OPEC production quota is 1.74mbpd; it is the world’s 14th largest producer in 2022 according to the US Energy Information Administration. It has no business therefore importing refined products. Instead, it should be a major exporter and the West, East and Central African hub for refined products.

But the country sabotages itself by holding on to four state-owned refineries that have not produced in recent years, have been making losses for over three decades and succeeded in driving out the private sector from domestic refining save for the brave Dangote Group, whose 650,000 barrels per day complex is due to be completed soon.
Defending its meddlesomeness, SSS spokesman, Peter Afunaya, said, “Some people may want to query that what is our business in the fuel issue is? We make bold to say that the service is charged with the mandate of detecting and preventing crimes and criminalities that may want to jeopardise internal security of which this one is not an exception.” The tactic is crude; the SSS went beyond its brief.It can interdict saboteurs; but it cannot issue ultimatums to business operators. The agency is not the regulator of the petroleum downstream.

The scenario is further proof of the disarray in the regime of the President, Major General Muhammadu Buhari (retd.). A serious, coordinated government would have cobbled together an inter-agency effort, efficiently coordinated, and with tasks assigned to each agency. In that case, the SSS would not have been the one issuing ultimatums to private business operators.

The NNPC’s assurance that it has about 1.9 billion litres of fuel in stock, which can last beyond the period of the Yuletide, is not visible in the market. This is not surprising as the NNPC’s recent advertised makeover from a state-run monopoly to a limited liability company has failed to lift the behemoth from its cesspool of corruption, inefficiency, and opaque operations.

It deducted funds meant to be remitted to the Federation Account to cover petrol subsidy in the seven straight months to September 2022. Similarly, the country reportedly lost about N22.68 trillion in foreign exchange earnings as result of the crude swap regime in the last 18 months. Moreover, over N4 million is incurred subsidy payment this year. This national folly has to stop.

There is no alternative to privatisation: the refineries, depots, pipelines, and other downstream assets should be privatised. There should be an emergency national programme to stimulate private investment in refining to avoid exchanging the disastrous NNPC monopoly for a private monopoly. Only competition can guarantee efficiency, market-friendly pricing, and innovation.

In the interim, Buhari should stop treating the scarcity with levity. As President and as defacto petroleum minister, he should suspend his endless foreign trips, and coordinate an inter-agency effort to resolve the current supply logjam.

Jessyjeff:
Nigerian rulers are perhaps the most visionless people on earth.

Nigeria has enough resources and manpower to be one of the developed countries in southern hemisphere, but we lack everything. From standard infrastructure to basic amenities, Nigeria has nothing.

You only hear about how much money missing from one government ministry to another.

Shamefully, this is the most populated black nation in the world. Are we so daft to be ruled by morons?

How can a country have so much potential and end up having absolutely nothing?

VeryWickedUncle:
Fuel is not scarce nor expensive. If you doubt me, ask yourself how fuel to burn criminals come out fast no matter the economic situation or area.

Dvdpity:
Shame to APC and PDP government. Any one gearing up to vote these bastards is one of the problems of this country. If you want Nigeria to be better, it's time to break all these cabals, Hyna and cartels holding Nigerians down, with poverty, Hunger and mindless killings.
Don't vote APC or PDP again.

Patrickker:

Them no go hear you, suffering no dey tire us. Infact, we are wired naturally to like suffering by default. In 2015, i was opposed to voting Buhari. My immediate family (6 of them) wanted to skin me alive. I was seen as the black sheep of the family. I was seeing a calamituous man who would be a weakling in many areas. I knew age, tribe, religion, region and nepotism was going to overwhelm him. I voted against him anyway (my conscience was freed at least). Fast forward to 2018, they saw a biting economy, fulani herdsmen killings with my state, Benue, bearing the brunt. They started complaining. I told them, this is the time i will support Buhari. We must complete it.

Kobonaire234:
If we want an end to scarcity then we have to remove subsidy.

The biggest mistake any government can make is to 'regulate prices'. We have been regulating prices of petrol since 1973, and in the process we have gone from having 2-3 working refineries to 4 and now to none.

Inherent in subsidisng fuel is the idea that we can sell fuel below the production cost and then pay off the resulting loss via subsidy. As we can see that is not possible. To even run refineries effectively, we need them to make a profit.....which means a refinery is allowed to sell fuel in a way that it can make a profit to pay off the supplier of crude, and its maintenance and upgrade costs, and the marketer is allowed to sell fuel in a way that enables it to pay off its transport costs, the refinery, its supplier. And all have to pay the government its due.

Subsidy does not help the poor. In 2021...it cost N261 to bring in one liter of fuel. Now as at November it was costing N510. The official price of the petrol jumped from N165 to now N179. And we somehow expect to keep it magically that low.?

Nigeria has wrecked our refineries at home because we could not let them produce at a profit....this is the extent of government mismanagement. Government did not let the refineries make a profit. Government over the years prefers to use a large and larger amount of the budget to pay off subsides...because it has no other way of helping the poor that Nigerians like.

The poor are helped in 'sane societies' by heavy taxation, and tax to gdp ratios that are as high as 40-50%...which pay for the welfare of most of the poor. In Nigeria, we do the paying by blanket subsidies, and by cutting prices of petrol. As a result, we end up taking a large chunk of our budget to pay for subsides...because government cannot control the production cost of petrol...whether in or out of Nigeria....and we take loans to cover our asses.


Until subsidy goes....there is going to be scarcity. You cannot bring in fuel at N510 and sell at N180. You cannot refine fuel in Nigeria above N250, and sell it at N180. Petrol, like the phones and rice and stuff you buy...costs money.


Thanks for listening to my TED talk on subsides.

obi58:


Subsidy must stay. Low fuel price is the only thing Nigerians benefit from the government. Instead every effort should be made towards investigating the inefficiencies in the fuel industry. Starting from accurately determining our daily domestic demand to accurately capturing the real volumes imported into the country to effectively Manning our borders to stop oil smuggling, to checking pipeline vandalism and bunkering, to providing incentives for quick setup of modular refineries nationwide to checking the excesses of Nnpc and the private depot owners etc....

A serious government will attack and eliminate all these inefficiencies first, set up domestic production not limited to Dangoté alone, denominate crude oil supply to local refineries in naira and their ancillary inputs likewise to reduce the drain on our foreign reserves thus strengthening the naira and then sell excess crude on the international market.

If even as low as 30% of these things are done you will discover that much of this subsidy burden on the budget will mysteriously disappear, fuel will be everywhere and our daily bpd will increase. If other oil producing countries can efficiently manage their petroleum industry and still subsidise fuel for their citizens so also can Nigeria.

Few years back Naira was stronger than the CFA, but today that is not the case. If Nigerians can go to Cotönou to buy cars and pay appropriate duty before crossing the border back here, I see no reason why people from other countries coming here to buy cheaper petrol cannot be checked and made to pay appropriate premium duties to government which can be ploughed back into improving our local refining capacity.

Kobonaire234:



At the end of the day, we will end up with a rising subsidy cost due to a rising cost of production, because the people who bring out the fuel and the people who sell the fuel and the people who refine the fuel ...want to be paid because

1.Cost of living

2.Cost of the machinery they use...including maintenance costs, replacement costs, and so forth...to refine the fuel.

3.Transport costs.

The rising subsidy means that government spends more and more money on subsidy...meaning we have to take heavy loans to cover the deficit.

We also spend more forex on subsidy...and more forex on imports....meaning no dollars to buffer the naira...meaning the naira keeps on falling.

As for inefficencies...smuggling happens because fuel cost less than in our neighbours. Stealing happens because free government money and because subsidy forces a lot of people to operate at a loss....which also fuels smuggling.

Finally, subsidy=price controls. Unless you are the most altruistic human being in the world, you won't let government set your price.

At the end, it means we have something called rising debt...worse than what we have now. Which means that ....


THE POOR PAY IT.

So, your choice. Pay for fuel at the market price....or pay for it at IMF HQ. At a higher rate.


Or remove subsidy, we get higher investment, more refineries, more jobs, more money flowing in, in return for a hike in prices that would become irrelevant as the benefits kick in.

Moferere:
Naija na scam