Fuel crisis again!

FOR over a month now, the country has been experiencing its third fuel crisis this year. Despite the suspension placed on the removal of fuel subsidy, Nigerians in the last six months have had to pay more for Premium Motor Spirit (PMS) amidst heavy scarcity. Going by the Petroleum Industry Act (PIA), subsidy on the price of PMS is ripe for removal by the end of this month. However, public outcry has hamstrung the government. In January, President Muhammadu Buhari  suspended fuel subsidy removal, as it was capable of worsening the suffering of Nigerians. Still, Nigerians in the last six months have had to repeatedly contend with product scarcity amidst fuel price hikes. Fuel queues are a regular sight  at filling stations across the country, especially in big cities.

Blaming the development on the non-payment of backlogs of bridging claims, an increase in the cost of diesel by tanker drivers to transport products across the country among other issues, oil marketers have been adamant on their preferred price regime.  According to the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), the current supply of PMS cannot sufficiently meet demand, and there is a need for total deregulation of the sector, lest the country goes into a standstill with time.  PMS, it says, is now sold for between N158 and N160 in the private depots where marketers are forced to buy because the Nigerian National Petroleum Corporation Ltd’s (NNPC) depots are currently inoperative, and so selling at the government’s approved pump price is no longer realistic.

The current fuel crisis is of course also traceable to the Russia-Ukraine conflict, which has increased importation costs of fuel by more than 100 per cent. Nigeria, Africa’s biggest oil producer,  imports fuel for local consumption since its four refineries are comatose. Meanwhile, according to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA),  President Muhammadu Buhari has approved the upward review in freight rate for transporters to alleviate the challenges associated with the distribution of PMS.  The review, it said, was necessitated by the upswing in the global price of petroleum products, especially Automotive Gas Oil (Diesel) and its implication for the cost of transporting PMS nationwide.

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With Nigerians going through pain on a daily basis while attempting to fuel their vehicles and with the sharp rise in transport costs, some civil society organisations in the country have been calling on the Federal Government to rehabilitate the country’s ailing refineries to curb fuel scarcity in Nigeria. This is actually the position of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), which  warned this week that fuel scarcity would not end anytime soon, as the country could not reap the full benefits of being an oil-producing nation with its abandonment of local refining of petroleum products and reliance on importation. President of NUPENG, Prince William Akporeha, decried the government’s deliberate policy of importation rather than local refining.

Shortly after his inauguration in 2015, President Buhari appointed Dr. Ibe Kachikwu, first as the Group Managing Director of the NNPC and later as Minister of State for Petroleum. Kachikwu’s mandate was  to turn around the fortunes of the country’s four refineries and build new ones. However, this was never achieved. The situation did not change with Kachikwu’s successor, Dr. Maikanti Baru, the immediate past GMD of NNPC, who promised to renovate the four refineries within the life of President Buhari’s administration. According to him, the government “would form strategic partnerships to ensure that Nigeria becomes a net exporter of petroleum products.” But not even a drop of oil has been produced by the refineries in the past few years. This is despite the Federal Government’s approval of the sum of $1.5 billion for the refurbishment of Port Harcourt refinery last year.

It is distressing that Nigerians are having to contend with astronomic fuel price increment at a time like this when Nigerians are in deep poverty.  The government, rather unfortunately, is still paying refinery workers for doing exactly nothing. Besides, even as Nigerians groan, people are still stealing Nigerian oil and selling it in neighbouring countries. We think that the Federal Government should work out a solution with the Independent Petroleum Marketers Association of Nigeria (IPMAN) and alleviate the plight of Nigerians. In the long run, however, the country’s oil industry has to be private sector-led, meaning that the government has to implement the PIA Act. As we have maintained in previous editorials, sinking huge funds into perpetually unproductive refineries is not a viable strategy.