A Review of the Nigerian Energy Industry

The annual end-of-year phenomenon here, again

*Fuel queues in a Port Harcourt fuel station

Chuks Isiwu

15 December 2017, Sweetcrude, Lagos – Nigeria was once again enmeshed in an avoidable fuel scarcity last week. Coming at the time it did – merely days to Christmas and the New Year – observers could not but wonder if the nation would ever outgrow the annual trend in most of the last 30 years, whereby the country had always suffered excruciating fuel scarcity during the Christmas and New Year season.

This year’s end-of-year fuel scarcity crept in rather quietly, and within two days, fuel stations across the major cities of the country were under lock and key.
In Lagos, the price of the Premium Motor Spirit, PMS, also known as petrol, hit N300 per litre as black market operators took advantage of the absence of the product at fuel stations to make brisk business. Long queues of petrol tankers were observed along the Oshodi-Apapa Expressway, parked by the roadsides with the drivers saying they had no signal to move to the depots to load.
Investigations showed that private depots in Apapa, Lagos, where many marketers get petroleum products from for distribution to other states, did not have PMS while those that had were doing skeletal loading.
In Port Harcourt, most fuel stations on Aba Road and East-West Road axis of the city were closed due to lack of supplies, while others that sold for only few hours experienced long queues that spilled into the roads. The rumour was that there was an impending increase in pump prices of petrol and that fuel station operators were hoarding the product in anticipation of the price hike.
The Independent Petroleum Marketers Association of Nigeria, IPMAN, in Lagos, alleged that the Nigerian National Petroleum Corporation, NNPC, did not give its members enough petrol. The association also accused the corporation of no longer selling to them at N133.28 per litre and that it was impossible for them to continue selling at NNPC’s official price of N145 per litre.
Executive Secretary, Depot and Petroleum Products Marketers Association, DAPPMA, Mr. Olufemi Adewole, was of the view that an increase in the price of crude oil had caused a rise in prices of refined products.
“It is only NNPC that is bringing products in. We also noticed a supply gap in what they brought in. It wasn’t enough at a particular time and the result is what we are seeing today”, he said.
Adewole explained that the reason marketers were not importing was that the landing cost of PMS had increased to about N165-N170 per
“But the government is saying we should sell at N145 without subsidy. That’s why we have to depend on NNPC to sell to us”, he stated, adding that “They (NNPC) have assured us that they have enough stock and that they are expecting vessels to come in. Our members have paid for PFI (Pro-forma invoices) for PMS. So, once NNPC cargoes come in, we will receive the product and sell to Nigerians”.
Despite this assurance by the NNPC, the scarcity did not go away. States like Lagos, Ogun, Ondo, Rivers, and Kwara as well as the Federal Capital, Abuja, witnessed lengthening queues of desperate motorists.
Insisting that it had enough stock, the NNPC in a release on December 5 warned against panic buying. It said it had enough stock to last through the festive period.
“For the umpteenth time, I wish to call on all Nigerians to stop panic buying. We have sufficient products to cater to the needs of all consumers”, the NNPC Group Managing Director, Dr. Maikanti Baru, said in a statement.
The same day, the Senate Committee on Petroleum, Downstream, said plans have been concluded for it to conduct a nationwide inspection of filling stations over the fuel scarcity.
According to the chairman of the committee, Kabiru Marafa, the Senate would not allow unpatriotic persons put Nigerians through any form of hardship, particularly during the yuletide.
Officials of the Department of Petroleum Resources, DPR, were also on inspection of petrol stations and storage tanks across the country. The officials visited some stations in Abeokuta, Ogun State to check hoarding of products.
The Senate also summoned the NNPC Group Managing Director, Baru, but he could not make it to the meeting as he was due to receive an award in the UK, although a later statement by NNPC disclosed that Baru had canceled his trip due to the biting fuel crisis.
As far as the National Union of Petroleum and Natural Gas Workers, NUPENG, is concerned, a cabal in the downstream petroleum sub-sector was to blame for the scarcity. It blamed the policymakers of the country for not adhering to its calls for the urgent rehabilitation of the nation’s four refineries in Warri, Kaduna and Port Harcourt, to get them working optimally, emphasising that the cabal was at work sabotaging all efforts to make products available through revamping the four refineries.
As SweetcrudeReports went to press, it was difficult to say whether Federal Government’s frantic efforts at resolving the fuel crisis, including an ultimatum to Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, and the NNPC group managing director, to bring the situation under control in four days, would yield the desired result.
This is more so given the indication by the Petroleum and Natural Gas Senior Association of Nigeria, PENGASSAN, to embark on strike over unfair labour practices in the oil and gas industry. It said it would disrupt fuel supply and distribution across the nation via the strike from Monday, December 18.
The Federal Government should be able to address PENGASSAN’s grievances in this regard on time and avert the potential disruption of fuel supply. If the government is unable to do this, then, Nigerians should be in for bleak Christmas and New Year celebrations.
However, the actual solution to fuel scarcity in Nigeria lies in the existence of local refineries to attend to the needs of nation’s over 160 million people and banish continued dependence on fuel importation, with all the corruption associated with it.
Examined alongside other oil-producing countries and especially members of the Organisation of the Petroleum Exporting Countries, OPEC, it is baffling that Nigeria has for decades remained with non-functional refineries that have gulped and are still gulping billion of naira in alleged repairs with nothing to show for it.
Iranians, for instance, could wake up every day sure of the availability of petrol, diesel, and kerosene at every fuel station. Why not, when the nation has over 10 local refineries that are carefully planned to meet national consumption, with a surplus for export? Added to this, the country has refineries across Asia to take advantage of market opportunities in that continent. Indonesia currently owns nine refineries with a combined capacity of one million barrels per day with plans to build three additional ones that will add a total 400,000 barrels per day to the national refining capacity.
The successes and exploits of Malaysia and Venezuela in the downstream petroleum business are well known. Both own strings of refineries and fuel stations locally and across their respective regions – Asia and Central America.
Lessons, indeed, for Nigeria.
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