Reasons for fuel scarcity right now in Nigeria

Over the last week, fuel scarcity has been reported in Lagos, Kaduna, and other cities around the country.

Gurustab previously reported that the fuel scarcity in Lagos was caused by the harassment of tanker drivers. However, we have gathered that there are more reasons why you do not have fuel right now.

In a recent interview on Channels Television, the Deputy National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Zarama Mustapha, outlined a few reasons why some cities are experiencing fuel scarcity.

He explained that when petrol has been imported into the country by the Nigerian National Petroleum Company (NNPC) Limited, the product is taken from the mother vessel to the depots, then to various retail outlets across the country by truck, where they are sold off to consumers.

Recent challenge: Last week, there was a delay in the discharge of petrol from the mother vessel to depots because of some challenges between private depot owners and the NNPC, which is the main supplier of petrol. The challenges were related to the private depot owners collecting petrol at the approved price per litre and refusing to sell to the independent marketers at the price approved by the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA).

The Pricing: NNPC depots sell petrol at N148 per litre, but private depot owners sell to IPMAN at N195 to N210 per litre. Private depot owners are complaining about the cost of transportation from the mother vessel to their private depots because of the escalation of the cost of the dollar. Private depot owners buy their dollars at the black-market rate.

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Need for private depot owners: The facilities the NNPC has for storage after importing petrol are not enough, so private depot owners who have the facilities, store petrol as well. The whole petroleum supply chain (including distribution, and refining) is plagued with challenges.

Impact of security agencies: Mustapha said another burning issue that poses a challenge to petrol distribution is interfacing with security agencies, including the police, and the military. According to him, the officers are encountered at loading points and roadblocks across the country and this affects the chain of petrol supply. He said:

  • “If you go to Lagos now, you will see chaotic situations at the depots, people spend 3 days loading a product that is not supposed to take more than 3 hours.”

Meanwhile, yuletide approaches: Mustapha said he believes that the management of the NNPC, regulatory bodies and other stakeholders are doing everything possible to see that there will be an ample supply of petrol in this yuletide period, which is a month away. However, he expressed pessimism about the on-and-off fuel scarcity, which he said needs intervention from the regulatory bodies, NNPC, and private depot owners.

According to Mustapha, previous governments have not been planning enough to meet up with population growth and demand growth of petroleum supply in the country. He said the challenges are too enormous for a single government administration to tackle.

The needed solutions: Mustapha said Nigeria needs to have in-country refining capacity. According to him, the combined refining capacity of Port Harcourt I and II, Warri, and Kaduna refineries is 450,000 barrels per day (bpd), which is not nearly enough to meet demand. So, the country will need Dangote Refinery to make up for the difference in capacity.

  • Mustapha also said the country needs to build more depots for storage, and regulatory bodies need to engage private depot owners and the NNPC to decide how best they can achieve the best pricing for the common man who is at the receiving end of the scarcity, highlighting the fact that IPMAN cannot do business at a loss.
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