On Nigeria’s perennial fuel scarcityFriday, November 9th, 2012
09 November 2012, Vanguard Newspaper, LAGOS - IT is saddening and a paradox that a nation that is richly endowed with a large human population and abundant natural resources, such as crude oil, could be in dire need of what is supposed to be a blessing.
The nation’s problem are man-made. They are generally hinged on bad leadership, corruption, poor maintenance culture, lack of patriotism and institutional failure.
Nigeria, a leading member of the Organisation of the Petroleum Exporting Countries, OPEC, has a large percentage of its foreign exchange earnings generated from crude oil sales.
While many of the consuming nations, which buy crude oil from Nigeria are comfortable with their fuel situation, our dear country is engulfed in incessant fuel crises, which has been taking a toll on virtually all facets of its national life because of the strategic importance of oil.
Latest is the recent scarcity experienced in major cities across the country as motorists formed long queues at the filling stations. Many of the filling stations sold a litre of petrol for N115, while others sold it for N150 or more, as against the official price of N97.
Initial reports of the scarcity of Premium Motor Spirit, PMS, were described as ‘an ordinary hitch’ in the supply chain to some Northern states has now spread to other parts of the country. Reports said the scarcity may linger for many more weeks!
Incessant fuel crises have led to long queues of vehicles at several filling stations across the country. In addition to the sky-rocketing, deviating pump price and racketeering, it has led to a huge rise in the cost of living and increased hardship for the people.
Unscrupulous marketers usually seize the opportunity of the situation to hoard the commodity in anticipation of announcement of a rise in pump price, promoting the black market.
The Nigerian National Petroleum Corporation, NNPC, had blamed the shortage on the continued closure of its vandalised System 2B pipeline at Arepo, Ogun State.
Repair works at the vandalised pipeline were stopped after suspected vandals allegedly killed three NNPC engineers at the site.
The vandals were said to have opened fire and fatally wounded three of the unsuspecting workers as they tried to gain access to the damaged points, after the flames were put out and product supply successfully cut off.
Also attributed to the scarcity is the reluctance by members of the Jetty and Petroleum Tank Farm Owners of Nigeria, JEPTFON, to import the commodity due to the fact that most of them already owed banks for fuel imported on behalf of the NNPC on credit.
As a result of the fuel scarcity, the Senate invited the Petroleum Resources Minister, Diezani Alison-Madueke and the Group Managing Director of the Nigeria National Petroleum Corporation, NNPC, Andrew Yakubu to a meeting alongside the Executive Secretary of the Petroleum Products Pricing Regulatory Agency, PPPRA, Reginald Stanley and stakeholders in the petroleum downstream sector to find a lasting solution.
The National President of the Independent Petroleum Marketers Association of Nigeria, IPMAN, Alhaji Aminu Abdulkadir had equally blamed the nation’s fuel scarcity on the continued lack of adequate security for petroleum marketers.
He stated that members of his association suspended the lifting of fuel from refineries due to insecurity of their trucks, to allow for the restoration of the vandalised pipelines and to ensure that products could move to the inland depots.
It is, however, not clear whether there is more to the fuel scarcity than what the public is made to believe, going by claims that IPMAN had been unable to import from international markets because their subsidy payments had been stopped.
Industry sources claim that the scarcity is further fuelled by the refusal of oil marketers to resume importation of fuel due to the N200 billion fuel subsidies owed the marketers since last year under the Petroleum Subsidy Fund, PSF, scheme.
The Federal Ministry of Finance on its part stated that it had paid N259 billion as outstanding subsidies for 2011 and another N78.8 billion for this year despite the marketers’ outcry of an alleged outstanding payment of up to N100 billion, while about N200 billion said to be owed the oil marketers by the Federal Government.
Going by past experiences, the current fuel crises may not abate until concerted efforts are made by the relevant stakeholders. First, the activities of vandals should be stopped.
These faceless people rupture pipelines, causing the system to close down and create abysmal short supply of petroleum products.
Oil pipelines have severally been blown up or damaged not only by militants in the Niger Delta areas but also in many other parts of the country. The pipeline networks are thereby compromised, forcing the government to outsource security of facilities for more than N6 billion.
It is quite unfortunate that our oil pipelines are insecure in this part of the world. In other countries that produce crude oil, pipelines are well secured.
Government and the relevant security agencies must ensure that our oil pipelines are secure at all times to prevent recurrence of the ugly incident of the killing of oil workers on routine maintenance duties as witnessed at the Arepo village and elsewhere.
It is not tidy that knowing the importance of the System 2B pipeline to the country and how dastardly pipeline vandals could be in their nefarious activities that the authorities should still send workers to repair the vandalised pipeline at Arepo, notorious for pipeline vandalism, without adequate police protection.
It is high time oil prospecting companies involved communities at ensuring that the pipes that passed through their domains are safeguarded.
Inadequate refineries, mal-functioning or under-functioning of existing refineries are another culprit for the incessant fuel crises. At the moment, none of the country‘s refineries is working efficiently, making the country to depend on 100 per cent fuel importation.
The NNPC is known to have imported more fuel into the country than the combined efforts of all the major oil marketers in 2009.
Efforts should be stepped up in ensuring that new refineries are in place so that there can be enough fuel for domestic consumption and if possible, importation.
In tune with the government’s much-touted privatisation programme, it could be economically wise for marketers to pool resources to build refineries – provided the business environment is conducive – instead of depending on fuel importation.
It is imperative to make sure that all the four refineries function in order to reduce the country‘s dependence on fuel importation. In fact, more refineries should be built to cater for the ever-increasing population and needs of the country.
Refining of the country’s crude would lead to higher opportunities in a deregulated market; stimulate medium scale service industries, better industrial capacity utilisation and creation of greater job opportunities for our teeming restive, unemployed youths.
The Venezuelan Ambassador to Nigeria, Enrique Arundel, once wondered why the subsidy became serious as he attempted to identify Nigeria’s problem; he said misplaced preference to export at the expense of local refining of crude oil makes the cost of oil to be high when compared to his country.
Arundel had punctured the argument put forward by oil bureaucrats that Nigeria has the lowest price of refined products among oil-producing countries. He posited that refining the nation’s crude oil would have brought more returns in terms socio-economic benefits.
Non–challant attitude of managers and operators in the oil industry may be another factor encouraging fuel services in Nigeria. The Minister of Petroleum Resources and the Group Managing Director of NNPC had consistently refused several invitations by the House of Representatives Committee on Petroleum, in a bid to find lasting solutions to the incessant fuel crises in the country.
This action is a clear indication that the managers of the nation’s petroleum industry are not ready to have robust deliberation and scrutiny that could bail-out the troubled sector.
*Mr. Adewale Kupoluyi wrote from the Federal University of Agriculture, Abeokuta, Ogun State.