Ending fuel supply: Deregulate downstream sector

by | December 27, 2017 12:50 am

It is unfortunate that the government allowed another round of biting fuel scarcity in this yuletide season that saw many Nigerians spend their Christmas day on fuel queues and many more stranded as a result of exorbitant black market fuel price or transport costs. And despite repeated promises of the Minister of state for petroleum, and the Nigerian National Petroleum Corporation, NNPC, the excruciating scarcity and suffering has continued.
Our deduction is that there appears to be a fundamental problem with the fuel supply strategy in the country that intermittently results in fuel scarcity and long queues at the filling stations. We feel both the government and the NNPC have to reconsider their strategies and logistics to ensure constant supply and availability of the product.

However, the NNPC needs to answer some urgent questions about its supply logistics. One, has the NNPC actually doubled its supply of petrol to the country from about 40 million to 80 million litres everyday as it advertised days ago? Two, how much monitoring are the agencies such as Department of Petroleum Resources DPR and Petroleum Product Pricing Regulatory agency PPPRA doing to ensure that the fuel is not diverted to other places?

These questions became necessary because it is confounding that a county’s whose daily consumption is put at between 27 to 37 million litres and with over 30 days reserve, the scarcity should have been over by now. But no, the queues are more pronounced and shortage in supply is all over the place. This shows one of three things: the agencies are not effective; the agencies do not have accurate data on fuel consumption in the country or some people are gaming the system and diverting the products meant for domestic consumption to other places or countries. Recently the NNPC said that under normal circumstances only 700 trucks of 33,000 litres is usually pushed to the market- equalling about 27 to 30 million litres per day, but now it has been doubled but yet the scarcity persist. It behoves on the agencies and the NNPC to identify those responsible for this horrible situation of keeping Nigerian at the filling stations. Hapless citizens are tired of the government’s constant lamentations and apportioning of blames. If the government against all sound advises have resolved to firmly control the business of petrol importation and distribution, then it should not blame anyone but itself for the current scarcity in the country.

This brings us to the point we have been making and shouting ourselves hoarse over: government have no real choice than to deregulate the downstream sector of the petroleum industry. There is just no better way to end the recurrent scarcity and ensure uninterrupted supply all year round. The truth may not be convenient but it needs to be told. The NNPC and by extension, the government does not have the capacity to import and distribute fuel on a consistent basis across the country. The world over, it has been proven that governments are not particularly good at running businesses, and this is painfully too obvious in Nigeria.

We urge the government to totally deregulate and liberalise the downstream sector, get out of the business of fuel importation and restrict itself to the regulation of the sector just like what obtains in the telecoms sector. Like the Director General of the Chamber, Muda Yusuf avers last year, “we have major marketers, independent marketers, depot owners and so on, and these people can bring a lot of value…But because of the policy environment, there’s no breathing space for the private sector in the environment”.
It is very clear that government control of businesses is now anachronistic. What the NNPC and the Petroleum Ministry are doing now is that they are abandoning their more important jobs of policy formulation and regulation and are taking over the day to day business of petroleum importation and distribution – a task they neither have the skills nor capacity for. It is time the federal government stop impeding the growth and development of the downstream sector.