How govt plans to end fuel crisis as black market booms
• ‘N75m worth of productive hours wasted in fuel queues daily’
• Chamber puts MSMEs’ loss at over N30 billion
As the nation looks up to next week to end the perennial fuel scarcity, as promised by the Federal Government, indications have emerged that the International Oil Companies (IOC) are set to support the downstream sector through a way of foreign exchange ( forex) provision.
The IOCs are major upstream oil and gas operators. But reports showed that they are now indicating interest in the downstream fuel supply crisis and are ready to help the marketers secure forex for fuel importation.
The Group General Manager, Group Public Affairs Division, NNPC, Garbadeen Muhammed, who also confirmed this development said, the major international upstream oil companies had indicated their willingness to support major oil marketing companies with some of the required forex.
According to him, the Minister of State for Petroleum Resources, Ibe Kachikwu is also working with the Central Bank of Nigeria (CBN) on innovative ways of closing the gaps in accessing foreign exchange.
He appealed to Nigerians to support the government to eradicate the fuel queues.
Meanwhile, the depot operators as at yesterday were still groaning under fuel shortages, as a few of them with products have indiscriminately increased the price to about N130 per litre.
Mohammed said: “We are vigorously pursuing an improved model for ‘crude oil for refined product’ exchange (the Direct Sale – Direct Purchase arrangement) which eliminates inefficiencies with an attendant cost-saving for the nation to the tune of about $1 billion. This will guarantee sustainable product supply to the nation.”
Rolling out the measures to be taken in the medium term, he said the NNPC was working on sustainable strategies to permanently address the issues and challenges facing the midstream and downstream sectors, adding that the ongoing rehabilitation programme would bring the refineries up to 70 per cent capacity utilisation within the next eight months.
“As a result of the challenges that major oil marketers face in contributing their supply quota due to constraint in accessing foreign exchange and outstanding subsidy obligations, NNPC is burdened with the obligation to guarantee almost 100 per cent in the national supply, since the domestic crude oil supply (445,000 bbls/d) can only guarantee about 50 per cent of the 45 million litres national requirement for petrol; we have secured presidential approval to take additional crude oil volume to guarantee national supply of petrol,” he said.
Besides, if commensurate financial value were to be placed on hours spent in searching for fuel and in traffic in Nigeria, especially Lagos, citizens could be losing about N75 million worth of productive hours queuing for petrol daily.
At an average of N60,000 monthly salary for a level-12 worker in the civil service, translating to N250 per hour and N1,000 daily for at least four hours spent in fuel queues in the last few weeks, The Guardian’s analysis shows that more man- hours may have been wasted in search for fuel, amidst poor electricity supply.
Already, latest figures from the National Bureau of Statistics (NBS) show that Nigeria’s labour force population is about 75 million, reflecting the number of people with taxable income who lose at least four hours in search for fuel, even as people depend heavily on black marketers.
Besides, while the Abuja Chamber of Commerce and Industry (ACCI) estimates that small business holdings in the country has lost N30 billion due to the non-availability of petroleum products across the country, other sector operators believe the loss could be more if the welfare effect were evaluated, considering the parlous state of electricity supply with fuel scarcity.
According to the Manufacturers Association of Nigeria (MAN), the lingering electricity and fuel crisis have affected businesses terribly as the cost of logistics, both for personnel and raw materials has risen while consumer prices may equally be affected.
MAN President, Dr. Frank Jacobs, notes that the cost of doing business in the country has become astronomical for many manufacturers as the lingering fuel crisis may further hit the bottom-line of businesses operating in the country.
Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf adds that there has been a high loss of productive hours due to personnel going to queue for fuel while the queues have equally hindered the flow of traffic in many areas.
“The problem at hand goes beyond the loss of man-hours but also the welfare effect if one considers the fact that there is no electricity and the fuel to service generating sets is equally unavailable. Logistics have been hindered, people spend more time in queues, and energy prices have equally gone up”, he added.
On its part, ACCI asserts that the continuous importation of the product portrays the country in bad light and it shows that the country is not capable of managing its resources.
The president of the chamber, Tony Ejinkeonye said in Abuja that Nigerian National Petroleum Corporation(NNPC) and its managers seemed to be at the crossroad on how to solve the lingering challenges of shortage of the product and may have given up as a result of its comments and body language.
He said businesses and the economy as a whole were being battered from all sides amid the challenges of electricity supply, infrastructure deficits in all facets, insecurity and a host of others.
His words: “The importation of products portrays our country in bad light. It shows us up as an incompetent manager of our resources. NNPC from the comments of its officials may have given up. We may seriously need to divest our refineries from everything that will not make them work. Businesses and our economy are being battered from all sides. Forex, energy supply, infrastructure, security concerns. The list is endless.
“Businesses especially MSMEs (Micro, Small and Medium Enterprises ) have lost over N30 billion through inadequate supply of petroleum products. Labour productivity is low as employees have stayed off work since the hike of fares by providers and when they come, they are always late.
“NNPC banned the use of kegs to buy petrol without considering that most households and small businesses run on petrol generating sets. This has forced them to close shops. Buying with kegs is not the cause of scarcity but inadequate supply of products. NNPC over the years has not proffered any meaningful solution. They are fond of treating symptoms instead of addressing the issue.’’
He said the Federal Government should as a matter of urgency find a lasting solution to the problem so that MSMEs which are the drivers of the economy could bounce back, adding that petroleum problems should not be allowed to be added to the numerous challenges the sector is already faced with.
Meanwhile, the Association of Telecommunications Companies of Nigeria (ATCON) has asked the Federal Government to take a cue from the telecoms sector and deregulate the oil sector.
In an interview with The Guardian, the President of ATCON, Lanre Ajayi, said the fuel scarcity was affecting members of the association.