Counting cost of fuel crisis

31 May 2015, Lagos – In what many observers have described as Nigeria’s worst nightmare in recent times, several businesses caught in the web of the protracted fuel crisis are still counting their losses running into hundreds of millions, reports Ibrahim Apekhade Yusuf

fuel scarcityFuel crisis is not new in this part of the world. But to many Nigerians who have had to endure the bitter pill of the lingering fuel scarcity these past weeks, the hoopla generated by the non-availability of petroleum products have been rather unprecedented.

From players in the telecoms, publishing, banking, manufacturing, healthcare givers, transportation, aviation sector, other service providers, the pangs of fuel scarcity was painfully felt by all, with many people enduring unending long queues at petrol stations across the country.

Fuel scarcity brouhaha

The nation’s economy is almost totally reliant on crude revenue but has seen income dwindle since the middle of last year as world oil prices halved.

The Nation gathered that the current fuel scarcity comes as the result of dispute between government and fuel marketers and transporters over unpaid bills of $1 billion. Since October 2014 they were unpaid the difference between real cost of products and fuel price subsidised by outgoing Goodluck Jonathan’s government.

The Major Oil Marketers Association of Nigeria (MOMAN) disclosed that the scarcity of fuel currently being experienced in major cities across the country was as a result of the inability of the federal government to pay outstanding subsidy claims. MOMAN is responsible for the importation of about 60 percent of petroleum products consumed in the country.

The Executive Secretary of MOMAN, Olawore Obafemi, who disclosed this, attributed the current fuel scarcity to the non-payment of arrears of subsidy claims and rise in cost which has hindered the marketers from importing petrol into the country since February.

To economic analysts, a constellation of factors may have caused the recurrent fuel scarcity being experienced in the country.

One of those who shared this view and very strongly too, is Tonye Cole, Chief Executive, Sahara Group.

According to Cole, the current fuel crisis centred on the new change of government, prospects for removal of fuel subsidies and weakening naira.

Apparently frustrated with the lingering oil crisis in the country, hundreds of people marched round the streets to embark on a mass protest due to fuel scarcity and the power outage across the country.

Field day for black marketers

With petrol tanker drivers refusing to lift petrol from depots, the resulting chaos made nearly impossible to buy petrol from licensed filling stations across the country.

Thus, black market sellers sold jerry cans of fuel by the roadside at inflated prices from between N5, 000, N10, 000 for five and ten litres of petrol, sometimes offering a tainted or diluted product that destroyed engines.

Businesses worst hit by fuel scarcity

As Nigerians continued to suffer under the current acute fuel scarcity, telecommunication giants like Airtel, MTN and Etisalat were forced to shut down their operations in certain areas across the country.

MTN Nigerian notified its subscribers of a major disruption of its network if the situation continues unabated.

According to Akinwale Goodluck, the company’s corporate services executive, MTN’s reserves of diesel is running low and if the company is unable to receive additional supply of the product within the next 24 hours, customers may experience poor services.

The company further assured that it was doing its best to deliver uninterrupted service to its customers, it however apologised in advance for any outages or inconvenience that its customers may suffer.

Etisalat issued a statement, saying its services will be disrupted as a result of the continuous fuel scarcity been experienced in the country. The statement released last Monday notified its customers of a possible disruption of service, adding that management is working to ensure that the current problem is abated on time.

The statement further appealed to affected customers to bear with management of Etisalat over the development.

Relatively, in a text message to its customer, Airtel, another telecommunication network whose service is currently been affected by the fuel scarcity, appealed for understanding on the part of the customers, while assuring them that efforts are on to turn the situation around.

Commercial banks in the country also closed offices. The first to announce the development was Guaranty Trust Bank, GTB.

In its announcement, it said that its branches will close at 1pm beginning last Monday across the country until situation normalises.

Like GTB, Union Bank of Nigeria, Sterling Bank and several other banks closed early because of diesel shortages.

Domestic airlines Arik Air, Aero Contractors and Dana Air were hit by a lack of aviation fuel while international carriers diverted to other West African nations to pick up stocks.

Apart from big businesses, frozen food traders suffered major losses.

For instance, traders at the Ijora-Olopa area of Lagos last Wednesday said they lost various food items worth N10 million, following the lingering national energy crisis.

According to the traders, the persistent electricity outage in the frozen food market is worsened by the scarcity of petrol and diesel, needed to power their power generating plants.

Afusat Popoola, President of the Ajeromi Frozen Food Market Association, said that the lost food items included chicken, turkey, fish, shrimps, gizzard and prawns.

Popoola said that the traders were victims of the logjam between the federal government and the petroleum products marketers over outstanding subsidy payment.

She also said that her members were caught unawares because they never envisage that the nation was going to be thrown into a prolonged crisis.

“The traders were crying when we ordered them to surrender all the decayed food items for destruction last Tuesday.

“The market has a reputation for selling fresh frozen food and we cannot allow any trader to sell bad frozen food under our leadership.

“What we destroyed on Tuesday because of power outages and our inability to purchase petrol and diesel was worth more than N10 million.

“We are appealing to the Eko Electricity Distribution Company (EKEDC) to always consider the impact of outages on our business and the health of the general public.

“Our business depends on regular supply of electricity,” she said.

The market leader said that irregular power supply had forced many traders out of the frozen food business and also made many of them to be indebted to the banks.

Most companies rely on a steady supply of diesel to power generators given the massive shortage of public electricity in the country. Last week, the government said production was just 1,327 megawatts — a record low.

Miffed by the fuel scarcity, a faction of the Nigeria Labour Congress (NLC) led by Isa Aremu said that it would direct workers to stay at home if the current fuel scarcity across the country is not addressed.

Aremu, said in a statement made available to the News Agency of Nigeria in Kaduna that, “If the current scarcity and price robbery of Nigerians continue, NLC will have no choice but compel workers to stay at home.

“Workers certainly cannot fuel themselves to work with their blood. There is a limit to slavery and state marketers’ extortion.

“With an outgoing President and incoming one, five past heads of state alive, 36 state governors and hundreds of legislators and scores of ministers, no country on earth parades the highest number of state actors like Nigeria.

“Yet, there is no governance with respect to distribution of basic products like petroleum and kerosene.”

According to him, it is time Nigerians stopped agonising in the hands of cabals holding the nation to ransom for several weeks through deliberate deprivation of petroleum products.

Concerted effort to end fuel scarcity

As many people agonised over the losses caused by the recurrent fuel crisis, the Managing Director of Capital Oil and Gas, Ifeanyi Ubah in what many commentators described as a well-thought gesture issued a statement penultimate Sunday, saying that he was pulling out of the marketers strike due to the hardship it was causing Nigerians and had instructed his trucks to deliver around the country.

Ubah who made good on his promise to supply fuel around the country, also called on other marketers to follow suit and supply product to end the scarcity.

Interestingly, the end of the crisis was reached after the main unions and industrial groups responsible for supplying and distributing the majority of petrol and diesel in Nigeria met the government for talks.

Agreement was reached last Monday to end a crippling fuel crisis, which had left the country at a virtual standstill for days.

Way out of fuel crisis

In a statement issued on behalf of the Lagos Chamber of Commerce and Industry and made available to The Nation, Remi Bello, President of LCCI while lamenting that the country was in dire straits as a result of the fuel scarcity, assured with concerted efforts on the part of all and sundry, especially those saddled with the responsibility of managing the nation’s resources, all will be well in the country again.

Most economic and social activities, Bello noted, “have been paralysed with an imminent shut down of the entire economy. Yet there is no evidence of active engagement with stakeholders in the petroleum industry to bring an end to the crisis. The government needs to demonstrate accountability to the people.”

Peeved by the overt lack of concern by the outgoing government, the LCCI boss warned the country and the economy should not be allowed to continue to drift as if there no one in charge.

In the view of Bello, one better way to rescue the country from the current situation which has taken a toll on the citizens and the economy is to galvanise action aimed at addressing virtually all sectors.

The Lagos Chamber further urged the new administration to immediately deregulate the oil and gas downstream sector, in order to provide an enduring solution to the recurring problem of petroleum product scarcity, corruption inherent in the subsidy regime, the collapse of refineries, lack of investment in the downstream sector, loss of jobs etc.

Government, he said, “needs to get out of the way, so that the sector and the economy as a whole can make progress. “This will pave the way for the restoration of normalcy in the sector and attract private capital, boost investments and create jobs.”


– The Nation

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