A Review of the Nigerian Energy Industry

Fuel scarcity to bite harder across Nigeria – Investigation

30 October 2012, Sweetcrude, LAGOS — THERE are indications from a nationwide investigation that the current fuel scarcity across Nigeria might persist for a long while, as the Nigerian National Petroleum Corporation, NNPC, cannot meet the current national demand.

Indications also are that major and independent marketers are yet to restart full importation of fuel products.

Investigations across the country show that motorists are buying the product above the approved price of N97, as petrol now sells between N110 and N120 per litre at most fuel stations in the country.

Concerned major and independent marketers have expressed fears that the situation is likely to get worse in coming months, as demand currently outweighs supply.

In Warri, Delta State, on Sunday morning, only one fuel station, Oando, was dispensing petrol, along the busy Warri-Sapele Road, from Airport Junction to Refinery Junction at a pump price of N110. Buyers did not bother about the price, as they were desperate to get it because it was not available in other petrol stations.

The manager of the station was not available to explain why the metre read N97, but the product was being dispensed at N110 per litre.

The fuel attendants said they were not in position to speak, but a knowledgeable source said: “They are selling based on how they bought it. It is scarce. Go and find out from the Pipelines and Products Marketing Company, PPMC, in Warri; they are rationing petrol, it is hard to come by, so marketers buy from black market and sell to make little gain”.

At Total filling station, near Refinery Junction, Effurun, near Warri, there was no petrol, as at Sunday morning. Sweetcrude learnt there was no supply to the major marketer at that time.

A staff, however, said: “Total is a major marketer, we get our supply from the government depot, but it is not regular. We sell at the pump price of N97 when we get. Right now, we do not have”.

A survey in Enugu State shows that the state has been experiencing severe scarcity of petrol, which now sells between N120 and N125 per litre at stations owned by independent marketers.

The price hike has lasted for one month but while the major marketers always lack products with their stations locked, the independent marketers usually have enough products on daily basis, which they sell at cut-throat prices with motorists and other buyers purchasing with grudges.

Only few major marketers like NNPC Mega Station, Mobil, Oando and Total located within the Enugu capital city sell at the official pump price of N97 per litre whenever they have the product. Apart from NNPC Mega Stations, other major marketers sell for few hours and shut down their stations apparently to hoard the product.

Investigations revealed that some of the major marketers allegedly divert their supplies to the independent marketers to sell to the public at N120 per litre, hence the gates of their stations are usually shut against buyers.

A manager of one of the private (independent) stations along Presidential Road, Enugu, Mr. Okey Ozoalor, said the product they sell since the price hike commenced were sourced from the major marketers and from other sources in Lagos at N110 per litre.

He said that even though they sell at N120 per litre, the profit they make was too meager to cope with the huge expenses incurred in bringing the fuel down to Enugu, adding that they (marketers) were not happy with the situation.

Some staff of the major fuel marketers approached said they were grossly under-supplied, making it impossible to meet public demand.

They said that the moment the supply situation improved, the independent marketers would have no option than to revert to the official pump price.

It’s fallout of subsidy saga — IPMAN
Chairman, Independent Petroleum Marketers Association of Nigeria, IPMAN, Eastern Zone System 2E, Barrister Chuka Utazi, blamed the scarcity of petroleum products on the face-off between petroleum importers and the Federal Government over fuel subsidy.

He said that major importers refused to bring in products following the refusal of the government to release subsidy on fuel, stressing that the dispute had created a major problem for Nigerians and the economy.

“IPMAN is aware of what Nigerians are passing through but it is the consequences of the current fuel subsidy problem. Since the Federal Government refused to pay subsidy on fuel insisting that those indebted must pay before they talk of subsidy, the oil companies refused to import. The only option left for the marketers was to source fuel from anywhere to sell to the public.

“For now, it is only the NNPC that is importing and they cannot bring enough to meet the needs of Nigerians. Most of these ships that bring in fuel are customized and they are owned by oil marketers, who have grounded them in protest for non-payment of subsidy.

“Since NNPC is not importing enough, marketers go outside the refineries to source fuel above the government-approved pump price. There is no place to lift the product now. Warri refinery has been under turnaround maintenance for over three months now.

Rivers State
“In Port-Harcourt, we have products but all the people from the North especially Abuja, were permitted to lift from Port Harcourt refinery through trucking. Abuja is being fed from Port Harcourt while other marketers in the East were stopped from loading.

“The NNPC is under instruction to concentrate on trucks from Abuja while those from East wait endlessly and thereby starving the people of the East,” said Utazi, who is also Commissioner for Transport in Enugu State.

He explained why fuel could not be sold at N97 per litre within the eastern part of the country for now, saying: “The position of IPMAN nationwide is that until the fighting elephants solve the problem of deregulation, the problem of scarcity and high cost will remain.

“Marketers lift fuel from NNPC at N88 per litre but the marketers are picking from the open market at between N92 and N95. Most of the private depots in Lagos are without products. When you add cost of trucking and other logistics, the product lands at over N100, so there is no way you can expect the person to sell at N97 per litre.”

Utazi revealed that IPMAN had commenced the process of establishing its own refinery as a way of tackling unavailability of petroleum products in the country, stressing that this would not only help to boost activities in the sector, but would alleviate the plight of Nigerians who have continued to suffer on account of intermittent disruption of activities in the energy sector.

Abia State
In Abia State, fuel scarcity has persisted. Many petrol stations are closed both in Umuahia and Aba. Those that have, sell at higher than the N97 official price.

In Umuahia, the state capital, apart from the NNPC stations and other major marketers like Oando, Total, MRS, which sell at N97 when they have the products, other stations sell between N115 and N120 per litre. The same thing is also applicable in Aba, the commercial city of the state, where they even sell as much as between N125 and N130 per litre.

The situation is worse in the rural areas, where the product is sold for between N140 and N150 per litre. However, the State Government has created a task force that monitors prices but the marketers still beat them by closing up shops whenever they notice that the task force is at work. They claim not to have products.

Plateau State
In Jos, Plateau State, fuel scarcity is biting harder as supply to the state has dropped drastically. Only a few filling stations dispensed fuel to motorists during the Sallah break with long queues stretching to several kilometers.

Last Friday, only about three filling stations had fuel to sell at the official price of N97.00 per litre in the whole of the state capital. However, some filling stations often referred to as “black market” had less queues as they were selling for between N130 and N131 per litre.

At one of the Total filling stations where the quantity was rationed at 20 litres per motorist, a staff said supply to the station was irregular and small. “Sometimes, a truck that is supposed to go to one station is shared among three and it comes irregularly”, he said.

However, some taxi drivers found at one of the “black market” stations along Farin Gada Road, accused the major marketers of diverting their supplies to make extra money.

They wondered why the ‘black market’ stations were always having fuel while the regular ones were without fuel. They appealed to government to do something urgently so that regular supply may be restored.

Hard time for Abuja residents
Investigation show that, in Abuja, the Federal Capital Territory and its environ, transporters continued to face a hard time for several weeks running, due persistent fuel scarcity in the city, even as many filling stations refuse to sell the product at the official pump price of N97 per litre under the nose of the NNPC and the Ministry of Petroleum Resources as well as the Presidency.

Investigations across the city revealed that many filling stations, especially those located in the outskirts continue to sell their products at between N110 and N125 per litre. This situation often led to long queues at stations that still bother to sell at the official rate.

Long queues could be seen at major filling stations within the city, including those operated by the NNPC, who continue to sell at the approved pump price.

However, commuters who may need the product in a hurry are forced to patronize the numerous black market operators strewn across major roads in the city and around the filling stations, or drive to filling stations around the suburbs which often sell at higher rates.

Abuja after Sallah
Filling stations in Gwarinpa, Wuse 2, Garki, Maitama and Central Business areas are known to attract the longest queues since they sell at the government-approved pump price of N97 per litre. A few kilometres drive from the city centre to areas like Lugbe, Gwagwalada, Nyanya and Mararaba, however, fuel is sold in many filling stations for N110 or more.

Some of the commuters within the city believe that the Eid el Kabir holidays may have led to a reduction in the demand for products, as many people had to travel out of the city for the festivity, leading to worries of a possible return, at the end of the holidays, to the massive queues of the past few weeks.

The NNPC has attempted to assure that it has abundant stock of petroleum products to last for another several weeks.

Ahead of the Eid el Kabir festivity and the envisaged heavy movement of people for the holidays, the Ministry of Petroleum Resources and the NNPC had tried to assure the public that it has stepped up fuel supply to the Federal Capital Territory and across the nation to meet up demands.

In Yenagoa, a litre of petrol is sold for N120 per litre at filling stations by independent marketers in the state due partly to what an insider blamed on the parlous state of the East-West Road and the paltry quota allotted to the state by the NNPC depot in Port Harcourt.

With the Patani flank of the East-West Road in Delta and the Ahoada-Mbiama axis in Rivers State cut off by flood, Bayelsa State was literally cut off from the rest of the country, prompting the state government to direct construction giant, Julius Berger to intervene in the Ahoada-Mbiama front, a development which helped improve vehicular movement on the route.

But the state, it was learnt, will continue to experience short fall in product due largely to the epileptic supply chain. The state, according to informed sources, is allocated a meager five truck daily which most times do not get to the state.

Marketers in the state are compelled to source for the product in the open market in Port Harcourt with some of them travelling as far as Lagos to source for fuel from private tank farm owners if they must keep their filling stations running.

The result is that product users are made to bear brunt, a station attendant who pleaded anonymity.

Interestingly, only the NNPC mega station in the capital city is selling at N97 per liter, and as a result, always having long queues spanning 2km on very busy days. Though most of the filling stations in the state capital are under lock and key due to non-availability of the product the few stations such as Emily, Ebilade, Timikon, AP, Emitari and Macary sell at N120 per litre.

Surprisingly, the product which is lacking in most of the stations in town is readily available in the black market where a litre costs between N180 and N200.

It could be recalled that attempt by the state task force to compel the independent marketers to sell at the approved pump price a couple of weeks ago led to a shut down of business by the latter.

One of the major players in the business, Chief Gospel Kpokpowei , blamed the seeming scarcity on the inability of marketers to source the product at the depot due to the paltry allocation allotted the state.

Kpokpowei who confirmed that only seven trucks are allocated the state in a week said independent marketers in the state are forced to go to the open market to procure fuel.

He noted with regret that there was no way they could sell at the government approved pump price since they bought the product at the open market at a more expensive price than the depot cost.

Also, the station manager of Timikon, who simply gave his name as Bukola corroborated the position of Chief Kpokpowei saying they bought the product from the open market because of the delay in supply and meagre allocation accorded the state.

In his remark, the chairman of the state petroleum task force, Benjamin Abrakasa, lauded the resilience of the marketers in ensuring availability of the product in the state in spite of the crisis situation caused by flood.

It’s above N97 pump price in Asaba
Most petrol stations in Asaba, Delta State capital and environs are selling petrol above the official pump price of N97 per litre. Investigation by our reporter revealed that the filling stations sell between N110 and N120 per litre. Except the three NNPC fuel depots located in Asaba, Total and Mobile filling stations, virtually others sell above pump price.

Most worrisome of all is that the some of the stations have even gone ahead to adjust their metres. At one of the filling stations on the Asaba-Benin expressway, the manager who simply gave his name as Chiedu explained that “it is not our fault that we are selling above N100 because of short supply”.

As a result of the increase in pump price, many motorists now besiege the few stations that sell at N97 per litre to purchase fuel after spending several hours on the long queues

Akure, Ondo State
The fuel scarcity across Ondo State has lingered for almost one month. Except for one or two of the major marketers all other independent and major marketers sell the product for between N120 and N130 per litre across the state. Long queues characterised the few filling stations that sell at the approved N97 per litre while dealers do not sell such product for more than three hours.

Black market operations have been booming across the state in the past one month.

It was discovered that majority of the major marketers in the state sell above the pump price of N97 per litre while all the independent marketers sell for N120 per litre across the state.

Major marketers who sell for N97 per litre close early only to sell into jerry cans late at night at N120 per litre.

Even the NNPC Mega Station in the state has run out of stock for days. Major and independent marketers interviewed said that they will be selling at a loss if they sell their consignment at N97 per litre.

According to them they bridge the products from a far distance and the cost of transport has eaten into their gains. The state consumer agency has been going round to sanction filling station selling above the pump price. It has sealed many station which equally have been under dispensing the product to un suspecting consumers across the state.

PMS sells for N140 in Cross River
In Calabar there has been scarcity of Premium Motor Spirit, PMS, while hoarding of the product and the sale at black market has become the order of the day.

For about two weeks now, most of the Independent Marketers in the state have been selling the product above the government recommended pump price of N97. 00 per litre. The Independent Marketers sell at between N120 and N140 per litre and always have the product in stock. But that is not the case with the major marketers like Total, Oando, Conoil, AP etc.Although they sell at the government approved pump price of N97, most of them claimed not to have PMS. Most often, it is the NNPC mega station that motorists buy the PMS but there is always long queue as the stations sells the normal pump price of N97.

Investigations revealed that some of the major marketers prefer to load the product in the evening and resell to the independent marketers above the pump price at night. A source close to some of the major marketers had hinted that they sell their products to the independent marketers at night at N105 per litre.

Besides, some of the major marketers who operate in the night make brisk money by selling to the black marketers who sell to motorists at their own price, though based on the buyers bargaining power.

In some cases ten litres of petrol is sold for between N1,500 and N2,500. At Uddy King Filing station, Atu Street, Calabar, where as at Sunday they were selling at N120, one of the fuel attendants who spoke on the condition of anonymity, claimed that they had been buying PMS at a higher price.

The station sold petrol at N140 per litre during the sallah holiday. The attendant claimed that if the government wanted the independent marketers to sell at the approved pump price, government should first address the high price at the depots.

At MRS fuel station in Mayne Avenue, Calabar, the price of the product was boldly written N130 but the attendant claimed that it was the price they sold on Saturday and that on Sunday, they were selling at N110 per litre.

The manager of NNPC mega station, Emmanuel Baboo said the independent marketers seemed to be extorting money from the public and it appeared government no longer have control over them.

According to him, the mega station sell at the recommended N97 because they get supply from government, adding that the reason why the product was always available in the independent marketers outlets was because they buy the products at higher price from the major marketers and some major marketers were always willing to sell to them because they make more money from it.

Ado Ekiti
Petroleum scarcity has now become a daily occurrence in Ado Ekiti and some major towns and villages in different parts of Ekiti state in the last few weeks. Most filling stations sell between N115 and N120 per litre, even as the two NNPC mega stations located in the state capital did not have the product.

Adducing reasons for the scarcity and why the product was being sold above the official price of N97 per litre, Mr Demola Ojo, station manager of AP Filling Station, Egbewa junction, Ado Ekiti, said his station buys from the third parties as most marketers who they used to lift fuel from are no more interested in supplying the product because of the high cost involved. He said the cost of lifting fuel from Ejigbo Depot to Ado Ekiti was about N110 per litre, adding that the cost of diesel used to dispense petrol must be taken into consideration before arriving at selling above N97 official price

There has been acute shortage of petroleum in ilorin and metropolis for some weeks now.

From the International Airport, Ilorin road, when entering the Kwara state capital from ogbomosho axis, to Ganmo when coming into Ilorin from Offa, majority of the fuel stations are always under lock and key.

But on very rare occasions when there is fuel in a station, the situation is always rowdy as motorists jostled for even a drop of the product. Moreover, the product is being sold for between N110 and N120 per litre,

Also on very few occasions when the NNPC mega station along Asa Dam sell petrol, there is always long queues because it is the only station that sells at the official price of N97 per litre.

As a result of rigours involved in buying the product there, those who could not withstand it always prefer to buy at higher prices.

Explaining the rationale behind the current experience, an elder of Independent Petroleum Marketers Association of Nigeria in Kwara State, Alhaji Kunle Sanni, said the scarcity was a result of the damaged supply pipeline in Ogun state which has caused drastic reduction in supplies to Ilorin and other parts of the western region.

He added that on rare occasion when dealers are supplied, they buy the product from second, third or even fourth parties before reselling to the end users, hence it cannot be sold at the official pump price.

It’s between N110 and N120 per litre in Lagos
In Lagos, filling stations across the metropolis have unilaterally hiked pump price to between N110 and N120 per litre. A survey conducted from Friday up till Monday, showed that many filling stations were not opened for business as their gates were securely locked. Motorists and other fuel consumers had to go round, in search of stations that opened for business.

Most of the filling stations that had the product sold above the N97 official price per litre. Even the NNPC mega filling station along Oshodi-Apapa Expressway, at Mile 2 area and the NNPC mega stations at LASU-Isheri road were shut.

Some consumers, including teenagers and adults were seen clutching various sizes of jerry cans and kegs, searching for the product to power their generators as Power Holding Company of Nigeria had plunged parts of the state into darkness.

Consumer’s comment
Asked why consumers still patronised the filling stations despite the unapproved hike in pump price, a potential buyer in one of the stations, Mr. Akpan Johnson, said: “We have no choice but to buy the product because most filling stations do not have fuel to sell while some of them are hoarding it for no just cause.

“Don’t we have responsible government officials to put these people in check from exploiting the already exploited citizens. The managers of these filling stations are just feeding fat on innocent citizens.

“I can’t wait to see these people locked behind bars for sabotaging Nigeria’s economy and exploitation of the people.”

Station managers  
Most filling station managers who were selling above N97 per litre were not willing to comment on the situation but one who did not reveal his identity, explained that it was not the fault of the dealers. He said they bought their last product from the depot at N103 per litre because of the limited supply available in the sector, hence, the present pump price of N110.

“Nobody goes into any business to incur loss, and we have to recoup our money,” he said.

The manager of Ghegheto filling station, along LASU-Isheri Road, Lagos, Mr. Henry Oheri, said that they now buy the product above the official pump price which has left them with no option than to sell at N110 per litre.

Explaining their ordeal, Oheri said: “Before now, we buy the product at N90 per litre from the depot and the marketers add their profit margin which increased the price of the product to N92 while the owners of the filling stations sell at N97.

“Last week, our driver slept at the depot for four days, and even at that, he was unable to get the product until the close of work last Wednesday. But on Saturday, we went back contacting a private truck that already had access to one of the depot, who assisted us in transporting the 33, 000 litres of the product down to the station. All these do not include the unofficial negotiation that went on before we were able to get the product.

“Also, we had to pay the truck N100, 000 to convey the product. All these will be added to the cost price of the product.”

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  • Perhaps government, organised Labour and select portions of civil society have reached an agreement to implement full blown deregulation of the downstream in a systemic manner – get the government to slowly but steadily pull out of the fuel importation, supply and distribution business and let the people slowly get accustomed to paying the new prices. We dare say if this is the case, it is a spineless but brilliant move. Not all wars are won with bombs, bullets and bayonets.