*Why petrol scarcity persists – Marketers
24 December 2015, Sweetcrude, Abuja — As Christmas day arrives, many commuters across the country find themselves caught in long, winding queues, in what has become a perennial struggle for fuel. Another Christmas, another fuel crisis, seems to be the order of the day in Nigeria for the past several years.
This is despite assurances by officials of the Nigerian National Petroleum Corporation, NNPC, that the fuel scarcity, now in its third month, would be arrested in due time for the festivities.
In what has become a yearly ritual, and for inexplicable reasons, Nigerians are getting used to the non-availability – real or artificial – of petroleum products, especially the premium motor spirit (PMS), popularly known as petrol, in filling stations by every year end. But, this time, things have gotten a lot worse.
Reaching its third month since reports of the fuel scarcity began across major cities in the country, the ongoing crisis is becoming one of the longest experienced by Nigerians in many years. And, coming barely a few months into the life of an administration that swept to power on the promise of ‘change’, a lot of Nigerians appear to take the ongoing fuel problems as a personal betrayal.
And there seems to be no end in sight. In fact, some marketers, who preferred anonymity, told our correspondent that the ongoing petrol scarcity would persist as government had failed to address the issue of foreign exchange hindering fuel importation.
They said that marketers were willing to import fuel, but scarcity of foreign exchange remained a serious challenge.
So, despite receiving N413 billion in subsidy claims last week, many petroleum marketers may have suspended fresh importation of petroleum products.
Oil marketers have confirmed that the Federal Government has paid them N413bn petrol subsidy claims and also explained why the country is still experiencing fuel scarcity.
According to them, the actual payment of the subsidy claims was done about a week ago after a directive was given by President Muhammadu Buhari mandating the concerned agencies to settle the debt.
The Executive Secretary, Major Oil Marketers Association of Nigeria, MOMAN, Mr. Obafemi Olawore, told our correspondent that although the marketers had started importing petrol, it would take a minimum of three weeks for the product to get to Nigeria and for it to be discharged from the various import vessels.
When asked to state if the marketers had been paid and why there is still petrol scarcity, Olawore said, “Subsidy has been paid but you have to calculate when it was paid, which was around last week. And when it was paid, we didn’t get it until the President directed that they must pay it immediately. And it took more than four to five days before we got it.
“Now, even though the subsidy has been paid, it takes two to three weeks to bring in cargoes from Europe. The minimum time it takes to bring in a vessel from Europe is two weeks and it takes about one week to have it discharged. So, at the earliest, three weeks will pass to complete the process.”
According to some importers who would speak off the record with our correspondent, the development may have been responsible for the unabated fuel scarcity nationwide.
Indeed, some marketers told this correspondent yesterday that the scarcity could linger till February 2016. Specifically, they worry that the alleged plan by the Federal Government to remove subsidy on petrol next year and commence full deregulation by January 1, is already causing ripples among marketers.
The marketers, who claimed to be in full support of the deregulation of the downstream sector, lamented that the secrecy surrounding its implementation and take-off date is already causing uncertainty within the sector.
“Marketers are not against deregulation. But deregulation must be planned for. It must not be a hasty decision. We are entities that invest a lot in importation of petroleum products. If a decision that is to affect us must be taken, then, we must be taken into consideration. For now, uncertainty pervades the sector,” an importer said.
Another marketer said Nigerians are not considering the vagaries involved in deregulation. “There are speculations that with deregulation, a litre of petrol would sell for N97, which is a possibility on one hand. But considering the current price of crude oil which sells for about $38 per barrel, what if this price slides further in the weeks to come and the permutation declines to less than N87 for a litre, who bears the loss?” he asked.
According to him, all these uncertainties surrounding the downstream sector have further dealt a debilitating blow on a quick resolution of the current fuel scarcity.
But the Minister of State, Petroleum Resources, Dr. Emmanuel Kachikwu, in a bid to douse tension over speculation regarding the plan to increase petrol price to N97, denied such intention by government. Kachikwu, who also doubles as the Group Managing Director of the NNPC, advised Nigerians to disregard such insinuations.
He said the discourse has long left the realm of subsidy removal to a more scientific price modulation approach which entails an elastic price mechanism regime to be reviewed periodically to reflect the prevailing international price of crude.
He explained that when operational, the novel price modulation system will place a N97 per litre cap on the price of fuel to ensure that Nigerians are insulated from the vagaries of the global crude oil price.
“I did not say that refined petroleum products will sell for N97 per litre next year. I said between a band of N87 and N97 we are going to be looking at prices and today, the prices are largely close to N87. So, there is no need to change the price,” he said
The minister noted that to determine the price of petroleum products in future, the Petroleum Products Pricing Regulatory Authority, PPPRA, will undertake quarterly review of the crude oil market situation.
“I have not put a static figure. PPPRA will have to do the calculation to be able to announce what price PMS (petrol) will sell for in January; but we do not anticipate any major shift because of the price of crude today,’’ he noted.