Fuel scarcity to linger till May as NNPC delays imports

Motorists queue at a filling station

• Stakeholders insist on privatisation of refineries, pipelines
• Kachikwu regrets poor supply of product, pledges quick solution

More anguish is coming to Nigerians over the current fuel scarcity. The crisis, which has lingered for over two months, may continue till May, second quarter of this year, due to alleged inability of the Nigerian National Petroleum Corporation (NNPC) to meet the daily need of Premium Motor Spirit (PMS) in the country.

While some of the Major Oil Marketers of Nigeria (MOMAN) and Independent Petroleum Marketers Association (IPMAN), which jointly own 22 per cent import allocation of PMS, stopped importation as they find it hard to source foreign exchange, NNPC, which now controls 78 per cent of the market, does not have fuel vessels on ground to tackle the existing crisis.

Queues at filling stations in some major cities across the country appear to have stretched as many depots, which depend on NNPC for replenishment have exhausted their stock.

The Minister of State for Petroleum, Dr. Ibe Kachikwu, has apologised for the current scarcity, saying the situation would soon be over. Kachikwu in NNPC’s Twitter account yesterday, apologised for the “pains” caused by the current fuel scarcity, saying it was not his intention to see Nigerians queue up unendingly to buy fuel.

“I apologise to Nigerians for all the pains. Nobody wants to see people spend two hours on fuel queues…”

He explained that he had been on tour of some fuel stations around Abuja, and that the corporation was working on a “long-term solution”, and that the scarcity would soon be a thing of the past.

“We are working on long-term solutions. We are on tour of some fuel stations within Abuja and environs. I assure that the fuel situation will soon be allayed,” he tweeted. But The Guardian learnt yesterday that NNPC had almost run out of stock with no serious arrangement to bring into the country more vessels of PMS.

Stakeholders, yesterday, at the Petroleum Downstream Group of the Lagos Chamber of Commerce and Industry (LCCI)’s 2015 Business Outlook: Petroleum Downstream Perspectives, accused the Federal Government of being responsible for the fuel challenges in the country.

Specifically, the Managing Director/Chief Executive Officer, Mobil Oil Nigeria Plc, Tunji Oyebanji, said that the supply challenges the country was experiencing would not go away until government reviewed its import allocation system, which gives NNPC a higher slot for the importation of PMS.

According to him, a complete deregulation would encourage the construction of new refineries; liberalisation of fuel import; and open access to oil and gas facilities such as pipelines, depots, jetties and more. He expressed concern that the downstream sector had not yet grown to the anticipated heights despite several years of commercial oil production in the country.

Oyebanji said that the reason the sector had not progressed was due to the pervading participation of government in the affairs of the industry, and until that was cleared, “we will not see the benefits that accrue to the consumers and the economy at large.”

He urged the Federal Government to concession the pipelines and sell 60 per cent share of the country’s refineries to make them more profitable, saying the regulation of the downstream sector was the reason for all the inefficiencies and distortions in the system.

He decried the low investment in the retail sector by operators and called for the consolidation of privately operated tank farms in the country. Also at the forum, former Chairman, Petroleum Products Pricing Regulatory Agency (PPPRA), Reginald Stanley, lamented that the country’s refineries had been producing below 20 per cent capacity in the last 10 years. This, he said, had encouraged massive importation of petroleum products in the country and fuelling inefficiency and loses of revenue.

Stanley disclosed that 90 per cent of the country’s pipelines were out of operation, which he said, had necessitated high road transportation for distribution of petroleum product. He stressed the need for NNPC fuel import to be reduced and policies put in place for marketers to drive the downstream.

Dwelling on the high cost of forex, he said that products could not be imported on parallel market rates. “There should be a transparent management of the forex to avoid round-tripping. There is the need to reduce NNPC import volume and marketers should be allowed to import more due to spread of locations’’, he said.

He also called on the promoters of modular refineries to take a hard look at their economic viability due to the challenge of crude oil supply pipelines in the country.

He stressed the need for NNPC refineries to partner investors based on a 51 and 49 percentage arrangement and the need for diversification in the downstream, given the excess capacity of 129 depots.