Explainer: Is Nigeria’s Fuel Scarcity Influenced By ‘Bad Fuel’ Or Petrol Marketers?

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Over the weekend, alarming news of a possible fuel shortage in the country quickly resulted in queues at petrol stations, hectic traffic and an instant hike in transport fare. Within the next couple of days, tensions went up a notch after a couple of Lagos State petroleum marketers issued a statement announcing that fuel scarcity will continue across the country until depots are restocked with adequate and quality products. Let’s take a look at the current fuel scarcity in the country, its suspected causes and effects on Nigerians.

‘Bad Fuel’ Or Petrol Marketers?

The fuel scarcity has been attributed to the NNPC’s efforts to withdraw a wrong specification of petrol from circulation after finding unsafe levels of methanol and ethanol in fuel imported into the country. The government said these chemicals, found in the contaminated or adulterated petroleum exceeded Nigeria’s specification. This has resulted in the affected fuel being kept off the supply chain effectively causing a shortage in fuel distribution. This contaminated or adulterated petroleum is harmful to vehicles.

Nigeria’s Fuel Scarcity Problem

The worsening fuel scarcity has led to ‘panic buying’ as people scramble to get as much fuel as possible. As such people have been spotted in various petrol stations in different areas with 25-litre kegs. Some of the places where unreasonably long queues of cars with either sleeping or missing occupants have been observed in Lagos include Timac Petrol Station, Maryland, Ardov PLC (AP), Vitality Oil and Gas and MRS, Ikeja.

As people panic buy, certain petrol stations in the state have been forced to close temporarily because they have no supply, while those with suppliers are reportedly hoarding fuel and hiking the prices regardless of what the Nigerian National Petroleum Company (NNPC) had earlier established. Some petrol stations have been reported to let their number of sales run uncontrolled despite long queues. This has effectively resulted in the unnecessary extortion of customers based on whether they are making purchases in kegs or cars.

Earlier, the scarcity followed a move by petrol marketers in an attempt to disrupt the loading of petroleum products at private depots in Lagos and other parts of the country. Their motive for this action is to raise a protest against a new payment method. As explained by the Ore Depot, the new payment arrangement provided major marketers and very few independent marketers with huge funds with the opportunity to pay for 200 trucks and load them while those who had paid for one or two trucks would be in a queue for many months unattended to.

That aside, oil marketers attributed the scarcity to what seemed like the possibility of an increase in the ex-depot price of petrol by the government. This quickly became a source of concern for many petrol marketers despite the government’s assurance that there would not be an increase in the ex-depot price, pegged at N153 as of last November. Findings from certain sources have shown that marketers were buying petrol at high prices from depots, making selling to citizens at the government’s approved prices next to impossible. Some others have even been completely unable to get petroleum products in major depots around Lagos state.

The NNPC, in recent years, has been the sole importer of petrol into Nigeria. The firm generally sells to depot owners who in turn sell to retail outlets, from whom Nigerians make purchases at fuel stations. The NNPC has stated time and again that it is not responsible for the hike of the ex-depot price of petrol, and further investigations continue to point at depot owners for the price hike and hoarding in anticipation of an increase in price amidst the oil price rally.

NARTO (Nigerian Association of Road Transport Owners) strike threats

Following the ongoing fuel shortage, Nigeria may be plunged into another round of terrifying fuel scarcity if the Nigerian Association of Road Transport Owners (NARTO) makes good on its statement of withdrawing haulage service. This threat relys on if the Federal Government fails to address the uncomfortable rising cost of operation that its members are facing urgently.

Yusuf Lawal Othman, the association’s National President, has revealed that his members now find it difficult to remain afloat because of the high freight rate, which is regulated and paid in arrears. He also emphasized that members would be advised to ground their haulage tankers if nothing was done to address the matter. “Our people have parked their trucks and more people are going to park theirs,” he stated. The union had earlier decried the delay in the payment of about N45 billion bridging cost for diesel, demanding an increase in the transportation allowance factored into the pump price of petrol, but the continuation of subsidy payment on petrol meant that the freight cost would remain.

The NARTO has made their intentions which hint at a possible strike known, it is left for the government to take action.

When Will The Scarcity End?

Speaking with the News Agency of Nigeria (NAN), a marketer said:

“As we speak, the Nigerian National Petroleum Company Ltd is working to ensure that this disruption to the supply chain is addressed as soon as possible. However, there is the challenge of logistics and how to compensate those who were supplied with the adulterated products. The NNPC is working with marketers on this and once the depots are restocked, tankers will start loading and supply will improve across the country.”

 

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