By Adewale Sanyaolu
The frequent fuel shortages during the yuletide, especially during the Christmas and New Year celebrations is becoming one too many.
While Government, represented by the Nigerian National Petroleum Corporation (NNPC) constantly assures Nigerians of having enough stock to meet consumer demand during the festive period, the reality on ground at such period is always one of disappointment.
Save for December 2016, Nigerians have in the last five years contended with the monster of acute shortage of fuel during Christmas, which on most occasion snowballed into the New Year, a development that leaves millions of Nigerians in a sober state at a period when they should be having a good time with family and friends.
Last December is not an exception to this crisis as the NNPC battled to keep the country wet with fuel. Unfortunately, they could not salvage the situation as most residents in Abuja, Lagos and some other parts of the country kept vigil at filling stations in a bid to get the commodity.
Stakeholders have however, put the blame at the door step of the NNPC, insisting that their decision to assume the role of the sole importer of petrol created the 2017 Yuletide fuel crisis.
On the other hand, some Nigerians said the failure of NNPC to plan ahead caused this bottleneck, stressing that NNPC was aware that fuel demand in December was usually more than any period of the year and that they ought to have prepared for such.
But, it was not all a blame game on the part of the stakeholders as solutions and other far reaching measures were canvassed in order to forestall future occurrence.
What went wrong?
Chairman, Integrated Oil and Gas Limited, Capt. Emmanuel Iheanacho, attributed the persistent scarcity of petrol to monopoly of the product by NNPC.
Iheanacho, said that the inability of NNPC to create a window for private firms to import petrol also contributed to the scarcity.
According to him, the current shortage in fuel importation gap was caused by the landing cost of N171 per litre of petrol and the selling cost pegged at N145 per litre.
Iheanacho said this was not realistic as marketers could not import at a landing cost of N171 and sell at that pegged price of N145.
“The selling of the product at N145 per litre is no longer feasible with the current exchange rate.
“Shortage of foreign exchange and increase in crude oil prices have made it unprofitable to import petrol and sell same at N145 per litre,” he said.
This claim was equally corroborated by the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMA). Its Executive Secretary, Mr. Femi Adewole, said in previous years, DAPPMA members imported about 65 percent of the nation’s total fuel consumption, Major Oil Marketers Association of Nigeria: (MOMAN) 15 percent and PPMC/NNPC imports the balance of 20 percent.
Regrettably, he said the scenario changed drastically due to several challenges faced by marketers.
Adewole explained that, NNPC meets petrol demand largely through its Direct Sale Direct Purchase (DSDP) framework. But, due to price challenges on the DSDP platform, some participants in the scheme failed to meet their supply quota of refined petroleum product, especially petrol to NNPC. This, Adewole said is the main reason for the fuel scarcity
He added that, the International price of petrol went up during the hurricane Katrina and has not dropped below $600/MT ever since
‘‘ It is on record that any time NNPC assumes the role of sole importer, there are issues of distribution, because it is marketers who own 80 percent of the functional receptive facilities and retail outlets in Nigeria,’’ he said.
We all know that we presently run a fixed price regime of N145 per litre for PMS or petrol without any recourse to subsidy claims, however we also have no control on the international price of crude oil.
Current import price of petrol is about N170 / ltr, NNPC, which absorbs the attendant subsidy on behalf of the Federal Government, is the importer of last resort.
Exchange rate of Dollar to the Naira is N306 for PMS imports and also interest rate our banks charge is above 25 percent. Landing cost of petrol in Nigeria, based on the scenario above means any of our members that imports would have to resort to subsidy claims, a policy already jettisoned by the Federal Government,’’ DAPPMA explained.
Poor preparation
Having constantly admitted that the demand for petrol is usually massive during Christmas, stakeholders have argued that strategic reserves which the NNPC have constantly boasted that it has 30 days sufficiency to meet national demand may afterall be a ruse, as the currently scarcity is yet to last up to 30 days and Nigerians cannot get the product.
More worrisome is the abysmal state of the refineries whose operations ought to have been scaled up in preparation for Christmas.
Total Crude processed by only Port Harcourt refinery out of the three domestic Refineries (KRPC, PHRC
and WRPC) for the month of September 2017 was 115,441 metric tonnes which translates to a combined yield efficiency of 78.09 percent compared to crude processed in August 2017 of 178,788 metric tonnes which translates to a combined yield efficiency of 83.36 percent.
In September 2017, 886.46 million litres of petrol was supplied into the country through the DSDP arrangements as against the 983.42million litres supplied in the month of August 2017.
Stakeholders say the drop in DSDP supply to 886.46 million litres of petrol in September as against 983.42 million supplied in August signaled the commencement of challenges for December.
They argued that while it was expected that NNPC should have began stock piling products into its strategic reserves through its DSDP programme from September, the figures began to drop while the local refineries that ought to have provided a boost also started producing poorly.
For instance, the local refineries produced 59,874,201 litres of petrol in September 2017 as against 185,728,620 litres in February 2017, 170, 302,248 litres in April and 140, 710, 716 litres in June.
The total production of the local refineries in September is what Lagos will consume in six days at 9.9 million litres per day, translating to the approximately 60 million litres produced by Port Harcourt, Warri and Kaudna refineries for the month of September.
Failed assurance
On Oct 18, 2018 shortly after his investiture as a special marshal of the Federal Road Safety Corps (FRSC), the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Maikanti Baru, had assured that Nigerians will not experience scarcity of Premium Motor Spirit (PMS), also known as petrol, during the yuletide season because it had stored over two billion litres to ensure a hitch-free movement.
It said the end-of-year period was usually characterised by scarcity of fuel due to supply and demand disequilibrium. He had said the provision of adequate petroleum products would not only ease transportation but also make the roads safer for motorists, adding that consumers would have no need to hoard fuel in jerry cans.
“As we speak, the NNPC has over two billion litres of petrol and we want to sustain this level from now on up until the end of the year and beyond. This volume will give the country product sufficiency of about 60 days, well above the standard 30 days sufficiency threshold,”.
But, two months after making the promise to ensure that Nigerians have a hitch- free celebration, the situation is the reverse as Nigerians are now scampering for fuel as they battle with shortfall in petroleum products supply.
But beyond the fuel scarcity, Nigerian may as well have a stress free celebration if some tips aimed at conserving fuel and managing the little available are adhered to at this period of scarcity of products.
Guarding against pitfall
While Nigerians have tried to live and adapted with fuel scarcity during the Yuletide in the last five years, stakeholders are of the opinion that government should do all it can to put an end to this national embarrassment by making fuel available to Nigerians all year round.
Iheanacho said the marketers’ huge debts of over N800 billion had also contributed to the inability of marketers to import petrol.
He said most independent marketers had closed their companies due to inability to pay their workers.
Iheanacho urged the federal government to settle all the outstanding debts owed marketers since 2015.
According to him, commercial banks have started taking over the property and tank farms of some companies that could not pay back their loans.
On the other hand, both MOMAN and DAPPMA have advised that the sector be fully deregulated so that marketers will be free to fix prices commensurate to their landing cost as against the idea of government fixing prices.
They argued that if the sector is fully deregulated, it will remove the monopoly being enjoyed by NNPC as the sole importer of petrol while also encouraging other private sector players to commence importation of petrol products.
On forex, they said a situation where they source $1 at N305 was no longer sustainable if they are to sell at N145, rather they urged the Central Bank of Nigeria (CBN) to make such available to marketers at N205 to $1.