A Review of the Nigerian Energy Industry

Hope brightens for improved fuel supply amidst threats

Fuel scarcity worsens
Fuel scarcity worsens

13 July 2015, Lagos – Amidst lingering fuel supply dislocations and strike threats there are indications that Nigerian National Petroleum Corporation (NNPC) and a few oil marketers have stepped up importation of the products. About 37 ships most of them laden with petroleum products are expected to arrive Nigerian ports between last weekend and July 25, 2015, according to Nigerian Ports Authority (NPA).

The development is not unconnected to a recent meeting between officials of the oil marketers’ association on one had and the NNPC, the ministry of petroleum resources and finance ministry on the other hand.

The meeting was called by petroleum ministry to broker a deal that would enable uninterrupted supply of the products especially the premium motor spirit (PMS) popularly called fuel, to starve off scarcity and head off any embarrassment to the new government of Mohammadu Buhari, a move one of the oil marketers said was primarily for the effected government officials in the ministries and NNPC to protect their jobs.

there was indication that NNPC was running out of its own supply as the available stock was less than two weeks consumption volume amidst difficulty in financing adequate stocking.

The oil marketers under the umbrella body of Major Oil Marketers Association of Nigeria (MOMAN) and Independent Marketers Association of Nigeria had back-pedalled from importing and supplying the market because of disagreement with the government of ex- president Goodluck Jonathan in its last two weeks in office over the actual subsidy amount owed the marketers by the government.

The amount in dispute was N160 billion, as the then finance minister, Dr. Ngozi Okonjo-Iweala had paid only N130 billion out of N290 billion claims by the oil marketers.

Okonjo-Iweala had argued that she could only confirm the principal subsidy amount of N130 billion while the balance N160 billion being the back claims on interest charges on loans obtained by the oil marketeers for the imports as well as the foreign exchange differentials cannot be substantiated immediately, a conclusion that made her set up a committee to verify the claims. The committee did not finish its assignment before the government expired on May 28, 2015.

The marketers had bid their time to allow the new government settle down before going back to ask for their balance but they refused to be involved in further importation and selling of fuel at the subsidized price of N87 per litre unless the outstanding claims are settled, a development which had made the supply of the products become epileptic across the country with NNPC imports struggling to cope with the situation

It was gathered that the committee set up by Okonjo-Iweala had recommended that the claims were genuine and that the government should honour the obligations, a verdict which the recent meeting between the marketers and NNPC/ ministries of petroleum and finance have also agreed to. Indications are that banks have keyed into the new development and have started advancing loans to marketers to finance fresh imports of petroleum products.

Meanwhile, the Department of Petroleum Resources (DPR) has claimed that the country’s long running intermittent fuel scarcities are artificial, and the handiwork of unscrupulous oil marketers and depot owners. These groups, according to them are hoarding to create artificial scarcity and then selling petrol at N95 per litre, instead of the approved ex-depot price of N77.66, despite getting supplies from the NNPC and also enjoying Petroleum Support Fund (PSF) subsidy.

The oil and gas regulatory agency says the marketers are making double gains as they are paid subsidy from the PSF and yet they still arbitrarily increase the ex-depot price of petrol.
DPR therefore warns that the licences of offenders would be withdrawn henceforth if they do not desist from such practices, saying the actions of the depot owners who charge a premium of over N17.34 on a litre of petrol, over the officially approved price amounts to defrauding government and the public, since they all get the subsidy for the products they bring into the country.
*Emeka Anaeto – Vanguard

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