Home Business Long fuel queues across the nation amid IMF’s call for subsidy removal

Long fuel queues across the nation amid IMF’s call for subsidy removal

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Long queues have resurfaced at filling stations raising fears of fuel scarcity. The Nigerian National Petroleum Corporation (NNPC) has since allayed such fears. Although there was improvement in supply yesterday, many outlets remain shut in anticipation of shortage. Assistant Editor EMEKA UGWUANYI examines the cause of this development.

It all started with the speculation that there was shortage of fuel imports. Eventually, three days ago, many retail outlets were shut. The few that were selling had very long queues as motorists waited patiently to fill their vehicles tanks and buy some in kegs to keep as reserves and for domestic use, in expectation, the fuel scarcity will escalate.  Many of the filling stations that claimed not to have the product, it was later discovered, were only hoarding to sell at a higher price or to those that hawk fuel in gallons by the roadside, should the scarcity worsens. However, the stakeholders in the downstream especially the fuel marketing firms under the aegis of Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN) in collaboration with the Nigerian National Petroleum Corporation (NNPC) and the Department of Petroleum Resources (DPR) were able to bring the situation under control.

Cause of the current scarcity

The NNPC has been the sole importer of premium motor spirit (PMS) or petrol in the past few years as players in the downstream couldn’t import and sell at the regulated price pump price of N145 per litre. The NNPC as a state-owned organisation pays the shortfall that arises from subsidizing the product from the Federal Government coffers under the term “under-recovery cost.” Under-recovery, according to the NNPC, is the amount of subsidy the Corporation gains on behalf of the government for the importation and supply of petroleum products at a landing cost above the official retail pump price of N145 per litre of petrol. To industry analysts, there is no difference between under-recovery and subsidy. But because the Federal Government had said it has stopped payment of fuel subsidy but refused to deregulate the price of petrol, the NNPC adopted the under-recovery approach to be able to access public fund, which the private sector oil marketers cannot. Therefore, whenever there is a slight delay in NNPC’s fuel imports, it reverberates and the impact is fuel scarcity and that is what happened in this scenario.

As Nigeria is almost 100 per cent dependent on imported petrol for national consumption, issues arising from delays in the arrival of ships carrying fuel to some cargoes being off-specification. In the case of the consignment being off-spec, it is either the industry regulator, turns the vessel back to the place of import or the product would be blended to specification before being pushed out to the public for consumption. These issues occur often but because they are promptly resolved, the consuming public doesn’t get to know or feel it.

According to the Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN) Mr Clement Isong, who told The Nation early enough on Friday that the scarcity that existed wouldn’t last beyond the weekend, said their members had enough stock. He said there was no scarcity and advised fuel consumers not to engage in panic-buying as what led to the gap in fuel supply and distribution, which resulted in the queues at fuel stations, was a minor operational problem. The problem, according to him, has been addressed and depots are loading 24 hours and whatever supply gap will be closed within the weekend. Companies that makeup MOMAN include Total Nigeria Plc, Conoil Plc, Oando Plc, 11Plc (formerly Mobil Oil Nigeria Plc), MRS Oil Nigeria Plc and Forte Oil Plc.

Isong said: “All MOMAN members’ tanks have the product (petrol). There is no supply shortage. What caused the queue is a minor operational hitch. Whenever there is such technical issue and it takes up to 12 hours to resolve, it upsets supply and distribution chains and that is what happened in this scenario because it created backlogs of loadings that could have been done much earlier. However, the problem has been resolved. I advise the public not to embark on panic-buying as there is enough fuel. The gap in supply created by the technical problem will be closed within the weekend as our members are loading 24 hours through the weekend.”

An official of one of the depots owned by the Independent Petroleum Marketers Association of Nigeria (IPMAN) who didn’t want his identity disclosed said the problem was a slight scarcity. According to him, during the election period, the Nigerian National Petroleum Corporation (NNPC) didn’t make enough fuel imports. As a result of that shortage in import, there wasn’t enough fuel to go round and the NNPC has ever since been rationing what it has in stock. He said for instance, “If 10 depots supposed to get supply from NNPC and only five depots were able to get at the end of the day, certainly there must be a gap and that is the reason you see queues at the filling stations. We have marketers that have paid for fuel in our depot in the past two to three weeks and they are yet to be loaded because of inadequate fuel but I believe that supply shortfall will be addressed soon. It is not something so serious, I assume it was a costly responsibility oversight on the part of the NNPC.”

The National President of IPMAN, Chief Chinedu Okoronkwo, also confirmed the fuel scarcity was created by rumours. He said: “There was no need for panicking over fuel scarcity as virtually all the NNPC depots across the federation had fuel and were loading product to marketers. Marketers are currently loading petrol in Makurdi, Kano, Enugu, Aba, Yola, Suleja, Kaduna, Ejigbo, Mosinmi, Ibadan and other depots across the country. The shortfall in distribution was due to the slow pace of product importation and hitches at the jetty, which had been addressed. But the Federal Government is on top of the situation, there is enough petrol to go round. I have also instructed all our members to ensure adequate distribution of the product across the country.

“I have also directed them to ensure the product is sold at the official price of N145 per litre. If there are any issues on distribution and pricing differentials, members should call the secretariat for further action. The Petroleum Products Pricing Regulatory Agency’s (PPPRA) template has not changed, so no marketer should influence hike or sell above official price.”

Okoronkwo restated IPMAN’s commitment to supporting the Federal Government’s efforts on effective and efficient distribution of petroleum products across the country, adding that the Association had reached an agreement with other marketers for better synergy in making the product available in the country. “IPMAN which controls 80 per cent outlets has more advantage in distributing and dispensing in both urban and hinterlands in the country. In line with the Federal Government’s efforts at ensuring efficient petroleum products distributed across the country, IPMAN members have opted for seamless distribution of petroleum products,” he said.

The Executive Secretary, Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN,) said that NNPC distribution pricing had been a major issue for depot owners, adding that for now, no members had product in his facilities. Adewole said the price at which NNPC gives their members product and other charges make it extremely difficult for them to sell at regulated depot price. “It’s not profitable because we are getting it between N139 and N140 per litre with other additional charges, therefore, at what price do we sell it?the nation

 

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