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Fuel scarcity: Nigerians may be in for the long haul

by OLUSOLA BELLO & ISAAC ANYAOGU

December 7, 2017 | 1:45 am
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PIC. 19. VEHICLES QUEUING FOR PETROL AS SCARCITY OF THE COMMODITY PERSISTS IN ABUJA ON MONDAY (2/3/15). 1109/2/3/2015/SAA/BJO/CH/NAN

Nigerians may be in for the long haul as regards the current fuel scarcity as oil marketers tell BusinessDay that the Nigerian National Petroleum Corporation (NNPC) is not coming clean to Nigerians about the true state of the situation.
The clearest evidence of the huge supply gap is that major depots in Lagos are shut, BusinessDay observed. In Apapa, Folawiyo depot which holds a huge volume of supply is not loading while Aiteo is offering skeletal service. Nipco is also offering skeletal services while Forte Oil is not loading either due to lack of supply indicating that the scarcity could easily morph into a real crisis.
To complicate matters further, oil marketers are accusing the National Assembly of forcing them out of the market by refusing to approve payment of outstanding subsidy claims of $2billion, hampering their ability to continue products importation even after the executive arm of the government had sent the necessary document to the Senate for approval.
Marketers say at the current oil prices, the landing cost of petrol is about N160 per litre and they need to sell above that price to make profits. Nigeria has capped the price of petrol at N145 per litre.
“We (marketers) are afraid that if the money is not paid on time, this may attract the Asset Management Corporation of Nigeria (AMCON) to take over our businesses. The debts have impacted grossly on marketers, while only very few marketers are presently importing insignificant quantity of petroleum products into the country,” Obafemi Olawore, executive secretary Major Oil Marketers of Nigeria (MOMAN) told journalists in June.
This debt is why the NNPC had become the sole importer of petroleum products, while marketers are queuing to get the products on credit. This has also impacted the banking sector as loans to the energy sector constitute about 40 percent of their non-performing loans.
Dolapo Oni, head of energy research at Ecobank said, “We’ve got more than enough fuel to cover 60 days of national daily consumption but the bulk of that fuel is on vessels around Lagos Anchorage and Benin. We have a lower supply in the tanks onshore.”
NNPC faces an uphill task meeting national demand for petrol. The decision to peg oil prices is raising subsidy costs for which the government has not budgeted for and at the same time, it has a tougher job purchasing adequate refined products from international refiners who are now prioritising heating oil rather than PMS as winter is set to begin in Europe and America.
In France, the price of heating oil rose 14 percent on a 2000litre refill since July, going into the winter months according to a French publication.
“When crude oil prices are stable, home heating oil prices tend to rise in the winter months when demand for heating oil is highest. A homeowner in the Northeast might use 850 gallons to 1,200 gallons of heating oil during a typical winter and consume very little during the rest of the year,” explains the United States Energy Information Administration (USEIA).
Yesterday, the Independent Petroleum Marketers of Nigeria (IPMAN), accused the NNPC of favouring the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMA) in supply of petrol, who now sell it to them at N143, a price that too close to profit margins.
DAPPMA who control 35 out of the 95 petroleum products depots in the country, have been accused of favouring their members, some of whom own their own retail stations.
The implication of this situation is that IPMAN, that controls the retail end of the petrol distribution with over 20,000 filling stations, cannot get adequate supply hence the ensuing scarcity.
DAPPMA however denies this allegation claiming that they were offering preference to their members and want to meet their supply before selling products to IPMAN.
Sources tell BusinessDay that the NNPC and oil marketers have been meeting on short term measures to curtail the crises. The option being considered is to ramp up petroleum products purchase from global spot markets where prices are often higher.
Due to poor management of the refineries, Nigeria relies on imports of petroleum products despite being Africa’s largest crude oil producer. Experts in the oil and gas industry have been calling for privatisation of the refineries to forestall this situation.
They are also calling for efficient management of the process to ensure that only companies with technical and financial competence buy the refineries to forestall the situation that the power sector is currently is in where the assets were handed over to clearly challenged managers.
Diran Fawibe, the chairman and chief executive officer of International Energy Services (IES) earlier told BusinessDay that the refineries are a source of national embarrassment.
He described the refineries as a no win situation, a musical chair that has remained in one place without making any progress for the past two decade.
“There is no value in an asset that has remained unproductive for so many years and yet the government is still pumping money into it thereby given the impression that they can still be revamped. They are being managed to extinction,” Fawibe said.
Meanwhile the Federal government has declared that it has no plans to increase the pump price of the premium motor spirit ( PMS) also known as petrol and its associated products.
The Federal Executive Council (FEC) also gave the Nigerian National Petroleum Corporation ( NNPC) marching orders to end the present long queues at the filing stations across the country, before the end of this week.
Minister of Information and Culture, Lai Mohammed stated this while briefing Journalists after the weekly Federal Executive Council meeting presided over by Vice President Yemi Osinbajo.

 

OLUSOLA BELLO & ISAAC ANYAOGU

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by OLUSOLA BELLO & ISAAC ANYAOGU

December 7, 2017 | 1:45 am
12893  |   93   |   0  |   Start Conversation

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