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Fuel scarcity: Return of old bad times



Fuel scarcity: Return of old bad times


Oil prices, which have been rising for three straight weeks on Wednesday, touched two-and-a-half year highs of $67 per barrel boosted by an explosion on a crude pipeline in Libya and voluntary OPEC-led supply cuts.
According to weekly data from Baker Hughes Inc. Dr Diran Fawibe, chairman and chief executive officer of International Energy Services Limited, the rising price of crude oil was as a result of the strategy of the Organisation of Petroleum Exporting Countries (OPEC) not to cut output so as not to lose market share to non-OPEC members
With the Nigerian economy being almost 100 per cent dependent on oil revenue, this development, should be cherry news, after the price fell below $30 in 2015. But recent Nigerian history, shows that whatever oil prices is rising, there is seeming inability of the government to sustain a stable price for the petroleum products for domestic consumption; unfortunately, this is playing out again with this rebound of oil prices in the international market.
This has been attributed to the land price of refined petroleum products rising in pari-pasu with the rising oil prices.
Experts say that the only way out of the quagmire is total deregulation of the downstream sector and the country developing its domestic refining capacity.
The current petrol scarcity, the nation’s worst in years, has marred the 2017 Christmas celebrations and has lasted weeks has again raised the key question about why Africa’s largest oil producer continues to import petrol, and why its four refineries in Port Harcourt, Warri and Kaduna don’t work.
On assuming power in May 2015, President Muhammadu Buhari pledged to revive Nigeria’s minimally performing refineries to optimum capacity, in what appeared a recap of same promise as contained in the manifestoes of the then opposition All Progressives Congress, APC, during the 2015 electioneering period.
In September 2015, the NNPC in its report said Nigeria’s refineries worked at a combined capacity utilisation of a measly 1.96 per cent.
The report stated further that the combined value of output by the refineries amounted to N9.9 billion for crude processed in September 2016, adding that the associated crude plus freight cost stood at N6.3 billion.
This, the report said, represented a loss of N8.8 billion after an overhead cost of N12.4 billion.
In December 2016, the NNPC promised that the three refineries will work at “full blast” by 2017.
Ndu Ughamadu, the corporation’s spokesperson, said in a statement that NNPC would embark on a comprehensive rehabilitation of the refineries to achieve optimal capacity utilisation.
“The plan for next year (2017) is to get the comprehensive rehabilitation programme done,” Mr. Nghamadu quoted Anibor Kragha, NNPC’S Chief Operating Officer, Refineries, as saying. Kragha added that the corporation would also draw up a chart for routine Turn Around Maintenance (TAM) of the refineries.
But in September 2017, nine months after the announcement, NNPC’s Group Managing Director, Maikanti Baru, again announced the government’s plan to shut down the refineries for overhaul.
Baru said the government planned to embark on comprehensive rehabilitation of the refineries in order to bring them to their nameplate production capacities.
He also announced that eight committees had been inaugurated to monitor the exercise, with the mandate to conduct day-to-day check on the work streams.
Sunday Telegraph reports that with successive administrations failing to address the issue of fixing Nation’s oil refineries, the Dangote’s 650,000 barrels per day capacity refinery in Lagos, which is slated to come on stream in 2019; is the sure bet the country has for overcoming this reoccurring problem.
This came as a former Minister of Interior and Chairman of Integrated Oil and Gas, owners of a major oil tank farm in Ibafo, Apapa Lagos, Capt. Emmanuel Iheanacho (rtd) has attributed the persistent scarcity of premium motor spirit (PMS) also known as petrol; to the monopoly of the product by the Nigerian National Petroleum Corporation (NNPC).
Capt Iheanacho, who stated this in Lagos on Tuesday, said that the inability of NNPC to create a window for private importers to import petrol also contributed to the scarcity.
According to him, the current shortage in fuel importation gap was caused by the landing cost margin of N171 per litre and the selling cost pegged at N 145 per litre.
Iheanacho said that this was not realistic for marketers to import and sell at that rate.
“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 prices has made it unprofitable to import petrol and sell same at N145 per litre.
“The problem is that importation of petrol is being handled, almost 100 per cent, by NNPC, while private importers backed out because the increase in crude price has made the landing cost high,’’ he said.
Iheanacho said that the marketers’ huge debts of over N800 billion had also contributed to their inability to import petrol. He said that most independent marketers had closed their companies due to inability to pay their workers.
He urged the Federal Government to settle all the outstanding debts owed marketers since 2015. According to him, commercial banks have started taken over the property and tank farms of some companies that could not pay back their loans.
The Minister of State for Petroleum, Dr Ibe Kachikwu, admitted before the before the scarcity snowballed to normal national problem, that there was shortfall in supply.
It is against this backdrop that a former Minister of Education and co-convener of BringBackOur Girls Campaign, Dr Oby Ezekwesili, in a series of tweets on her verified Twitter handle, said total deregulation of the oil sector was the way to ensure a permanent solution to the crisis.
“Dear President .@MBuhari of @AsoRock It is not Rocket Science to FIX the Distortion in the Oil Sector. It is the underlying cause of the annual #FuelScarcity.
“It’s time to LET GO of the “politically beloved petroleum sector”. Sir, the SOLUTION is FULL DEREGULATION. Just. Do. It!” she said.
However, opponents of full deregulation have argued that it would lead to price increase as government would no longer be able to fix the selling price of the product. In a full deregulated situation, marketers, governments and businesses could bring in petrol at their own cost and sell at any price they deem fit.
While urging the president to ensure good governance, the Bring Back Our Girls leader said ensuring full deregulation would bring about productive incentive to the nation’s oil and gas sector.
“P @MBuhari, unleashes the Productive Incentive that FULL DEREGULATION would bring to the Oil & Gas Sector of our economy immediately and severe the umbilical cord that has tied up the sector in the knots of Politics. Free that sector NOW. End the poor governance & suffering,” she added.
Ms. Ezekwesili added that “no matter the depth of complexity of any Problem in a country, there are options of Solutions that can be mobilized to resolve them. Problems persist these days not for want of ideas to solve them but only because someone is FAILING to make a TOUGH CALL on the RIGHT SOLUTION.

According to Ndu Ugbamadu, General Manager Public Affairs, Nigerian National Petroleum Corporation (NNPC), the NNPC Group Managing Director, Dr Maikanti Baru, had, during a meeting with the heads of Nigerian Association of Road Transport Owners (NARTO) and Petrol Tanker Drivers (PTD), last Thursday; blamed diversion of the products for the scarcity.
He had disclosed that a nation that consumed 35 million litres suddenly increased consumption to 85 million litres due diversion to neighbouring countries.
He added that the scarcity was artificial as the corporation “as at today (Thursday last week) has adequate products and a 25-day sufficiency’’.
But the Depot and Petroleum Products Marketers Association (DAPPMA) in its reaction to the claims by NNPC said that the corporation lied to Nigerians on the on-going nationwide shortage of petrol.
DAPPMA stated this in a statement issued on Monday, signed by its Executive Secretary, Mr. Olufemi Adewole, the Association rejected accusations of product hoarding levelled against DAPPMA members.
While DAPPMA explained that it can neither confirm nor dispute NNPC’s claim of having sufficient product stock, the association said it can confirm that the products are not in the tanks of its members.
According to DAPPMA, there are always hitches in product distribution any time the NNPC assumes the role of sole importer of products. DAPPMA added that 80 per cent of the country’s functional product receptive facilities are owned by its members and such do not currently holds products.
“The NNPC imports and distributes products through DAPPMA, Major Oil Marketers Association of Nigeria (MOMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN). Our members pay NNPC/PPMC (Petroleum Products Marketing Corporation) in advance for petroleum products and fully paid up PMS orders that have neither been programmed nor loaded are in excess of 500,000 metric tonnes (about 800,000 litres) as at today and enough to meet the nation’s needs at a daily estimated consumption of 35,000 litres.
“Our members’ depots are presently empty. However, if the NNPC/PPMC provides us with PMS, we are ready to do 24 hours loading/truck out to alleviate the suffering of Nigerians until the fuel queues are eliminated,” said DAPPMA. The association maintained that the NNPC has been the sole importer of the product since October for various reasons.
Among these, DAPPMA said, is the fact that the country currently runs a fixed price regime without any recourse to subsidy claims. It noted, however, that the international price of crude oil is beyond its control. DAPPMA stated that the current price of PMS is about N170 per litre, with the NNPC, importer of last resort, absorbing the attendant subsidy on behalf of the federal government.
“We understand that NNPC meets this demand largely through its DSDP platform framework. However, due to price challenges on the DSDP platform, some participants in the scheme failed to meet their supply quota of refined petroleum products, especially PMS, to NNPC. This is the main reason for this scarcity,” explained DAPPMA.
It added that the current exchange rate of naira to the dollar is N306 for PMS importation, stating that banks also charge interest at a rate above 25 per cent.
The statement came in the wake of allegations that the current crisis was instigated by the marketers. Some Nigerians including government officials accused marketers of taking advantage of controlling the bulk of the fuel distribution facilities and outlets to divert and hoard products supplied by NNPC.
But, in its reaction on Wednesday, the NNPC in a statement accused DAPPMA of insincerity, describing as “very unfortunate” the association’s claim that the crisis was as a result of its members being denied products.
“NNPC wishes to affirm that it has supplied appreciable volume to DAPPMA, Major Marketers Association of Nigeria (MOMAN) and Independent Petroleum Marketers of Nigeria (IPMAN) to rid the challenges currently being experienced in the supply and distribution of petroleum products in the country,” the NNPC said in a statement by its spokesperson, Ndu Ughamadu.
“NNPC regrets that DAPPMA, which members had taken receipts of products from Petroleum Products Marketing Company (PPMC), a subsidiary of NNPC, and owe the company to the tune of N26.7 billion as at December 21, 2017, has the audacity to indict NNPC unjustifiably,” Ughamadu said.
Ughamadu said DAPPMA’s claim that the current fuel scarcity was due to the inability of the DSDP partners of NNPC to deliver was “unfounded and self-indicting.” He said many DAPPMA members also patronise the same DSDP partners.
The NNPC said it became the sole importer and supplier of petrol to the Nigerian market because DAPPMA members were unable to meet expectations. This is despite the concession by government giving DAPPMA access to foreign exchange to import petrol at an official rate of N305 to the dollar, the spokesperson said.
On what the corporation was doing to resolve the crisis, the NNPC said in addition to the increase in the supply of petrol since the beginning of this month (December 2017), it has also programmed to supply over 1.2 billion litres of the white products in January next year.
“This will translate to about 40 million litres of PMS supply per day, against about 700 trucks (about 27million – 30million) litres per day that Nigerians ordinarily consumes,” Mr. Ughamadu said.
Despite the current challenges, he reassured Nigerians that there was no plan to increase pump price of petrol above N145 per litre.
“The NNPC will continue to maintain ex–depot price of N133.28 per litre, which guarantees the pump price not exceeding the N145 per litre capped by the government.
“All stakeholders are implored to support the efforts of government to bring a speedy end to the current fuel distribution challenges being experienced in parts of the country as this is not the time to play the blame game,” he said.
However, Sunday Telegraph reports that as at Friday, NNPC and DPPMA continued to trade tackles over accusations of indebtedness and cause of the scarcity.
The NNPC claimed the marketers owed over N26.7 billion for product supplied. But DAPPMA shot back last Thursday night, saying none of its members is indebted to the corporation.
“DAPPMA is not aware of any indebtedness to PPMC (Pipelines and Products Marketing Company)/NNPC by our members,” the group said in a statement sent to Sunday Telegraph Thursday night. “The PPMC/NNPC does not transact business with marketers on credit.
“It is indisputable that DAPPMA members have paid for petrol supply (with bank funds) for over one month, the value of which is in excess of N90 billion, yet PPMC/NNPC had no cargo to allocate to them,” Adewole insists. “As such how can we be held responsible for hoarding?”
“We again reject any attempt to blame marketers for the shortfall in supply as it is not our making since NNPC has been the sole importer since October 2017.
The organisation said marketers had always sacrificed to keep the country running, despite over N600 billion debt owed its members, and over N800 billion owed marketers as a whole.

But in another twist, the Ekiti State Governor, Ayodele Fayose, faulted Vice President Yemi Osinbajo, over his claim that the NNPC is the one bearing the cost of fuel subsidy and not the Federal Government.
What is the difference between NNPC and the Federal Government? Who is NNPC and who is Federal Government? Is NNPC now an autonomous agency of the Federal Government?” were Fayose’s posers in a statement signed by his media aide, Lere Olayinka on Wednesday.
The vice president had told journalists in Lagos on Monday that NNPC and not the Federal Government was paying the N26 subsidy per litre of petrol.
This followed the confirmation by the GMD of NNPC, Maikanti Baru, that the landing cost of petrol was now N171 as against the official pump price of N145 per litre, and that the federal government was paying N26 as subsidy on every litre of petrol imported to retain the pump price of N145.
Fayose said: “Fact is, NNPC does not have the right to spend money it generates from the sales of crude oil. It does not have the right to swap crude oil for subsidy”.
“Where is NNPC getting the money with which it is subsidising petrol with N26 per litre? Is NNPC spending money from the sales of crude oil that should be paid into the federation account to pay subsidy?”
“If subsidy is being paid by the NNPC as claimed by Vice President Osinbajo, where is the money coming from? Is it from sales of crude oil? Does it now mean that the NNPC is spending part of the proceeds of the sale of crude oil outside allocation to the federal government by the Federation Account Allocation Committee (FAAC)?
“We were all in this country in 2012 when chieftains of the APC, including President Buhari led protests across the country against removal of fuel subsidy.
“Before he became President, Buhari maintained that fuel subsidy never existed and when he became President, he said he did not know what fuel subsidy meant.
“We were also in Nigeria in May 2016; when the Federal Government announced the removal of subsidy on petrol and went on to increase the pump price of petrol to N145 per litre.
“The same APC people, who protested against removal of subsidy and increment of petrol price to N140 in 2012, defended the removal in 2016 and increment of pump price to N145.
“In 2017 budget of the Federal Government, provision was not made for the payment of fuel subsidy, so also that of 2018. So where is the N26 they are subsidizing one litre of petrol with coming from? Is the Buhari-led government spending fund not appropriated by the National Assembly?”
But the NNPC GMD, Maikanti Baru, said on Friday that President Muhammadu Buhari authorised the Corporation to subsidise petrol for Nigerians.
Baru, who said this during a brief interview with State House correspondents at the Presidential Villa shortly after he performed Friday Islamic prayers; was reacting to the confusion thrown up by his revelations that government is paying N26 subsidy on a liter of petrol .
“Do you want me to remove subsidy?” he said in response to questions demanding clarifications on the subsidy.
“What I am saying is that the landing cost as should be sold in the pump without under-recovery should be N171.40.
“However Mr. President has directed that we should maintain all the parameters to ensure that it is sold at N145 per litre. And that is why we are selling at depot at N133.28.8,” he explained.


However, the on-going fuel scarcity all over the country has sparked criticisms from Nigerians all over the nation. This is as Nigerians on social media have blasted President Muhammadu Buhari for being incompetent and inattentive to the plight of Nigerians. They called for his resignation. Some Nigerians urged Buhari, who is Minister of Petroleum, to take responsibility and stop blaming others by finding a quick solution to the fuel crisis, adding that there should be no scarcity after removal of subsidy. Here are some comments: @aligthebaptist “Buhari is the most incompetent President we have ever elected in the history of Nigeria. You can’t hide incompetence; just drive around the country and you’ll see the level of hopelessness this govt has brought upon the already impoverished citizens#fuelscarcity @joeydozie “At N145 per litre, this Moronic @APCNigeria led government can’t ensure that there’s no #fuelscarcity.

A rudderless, directionless joke of a government. @tenovertrn “Does Buhari still remember that he’s the petroleum minister?#fuelscarcity @matthewottah “This is the 3rd fuel scarcity under Buhari in 2 1/2 years. First one was in Sept-December 2015. For three months Nigeria suffered but PMB didn’t blink. Second one was in April/May 2016 which he cunningly increased fuel from N87 – N145 and now December 2017. Buhari and #fuelscarcity @timi “I don’t even know who to blame for this #FuelScarcity Pengassan Strike,Greedy Oil Marketers, Daura farmer?But I choose to blame buhari since we blamed Jonathan for everything @michaelkerry@mbuhari himself is the minister of petroleum. It wouldn’t be partisanship to blame #fuelscarcity on him. Or is @GEJonathan …..

He should take responsibility for the first time @igweleoWhen we have finally adjusted to the $145 per litre, now #fuelscarcityhas engulfed us. What an incompetent govt! Nigerians are sorry GEJ. @itsyomie Nigeria is so fucked Up, Christmas should be d talk of the country instead it’s petrol..

Stupid government#yomie #fuelscarcity #Christmas @misterlarrie The Government/ President’s silence is the most annoying thing about this#fuelscarcity. Thank you for teaching us a political lesson, Muhammadu Buhari, we won’t make the same mistake again. Incompetent President! @badrappar #fuelscarcity I think buhari’s ear have started paining him again.

Didn’t say anything on #endsarsand still haven’t said anything on the#fuelscarcity @fk147I like how we keep shifting D Goal Post During Gej Tenure.When there is#fuelscarcity we held him responsible that he is the President& in Charge @iykimo It’s been bleak Christmas every year since Buhari took over in May 2015.Nigerians slept in fuel stations across the country yesterday.Sai Buhari Sai suffering #FuelScarcity @timiakegbejo No statement on#EndSARSNo statement on #fuelscarcityNo Presidential media chat… Impeach yourself you fraud @MBuhari @Mahrthins “People who voted for Muhammadu Buhari shouldn’t be allowed to make life decisions. #fuelscarcity.

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