Unable to fuel this Christmas
Today, let’s just worry a little about fuel scarcity in Nigeria. Yes, fuel scarcity in Nigeria. It has become a permanent crucible that citizens go through now and again especially at the end of every year. And it is not as if Nigeria has changed status from oil-producing to non-oil producing country. Nigeria still produces about 2 million barrels of crude oil every day.
Statistics put the daily domestic consumption of fuel for all purposes at 35 million litres per day. About 445,000 barrels of crude oil will be cracked to release this volume of white products – kerosene, aviation fuel, diesel and petrol.
The domestic capacity to do this is lacking. If all four refineries in the country were to operate efficiently at full capacity, they can only produce about 17 million litres of refined products leaving a shortfall of well over 50 per cent which must be sourced anyhow.
It is this huge gap between production and consumption that has precipitated the culture of fuel importation with its attendant well-oiled corruption machinery that assumes the euphemism of subsidy payment at the point of dispensation. Yet as at today, the story in the refineries is not about capacity underutilization but zero utilization because all four facilities have been comatose and experiencing an endless Turn-Around Maintenance (TAM) since the days of the military.
The last of the four refineries, the Kaduna refinery was commissioned in 1980. Since then and for 38 years, successive regimes did absolutely nothing to increase the abysmally low refining capacity of an oil producing country that sits big on the OPEC council. And so, the embarrassment of Nigeria being a gross exporter of crude oil and a net importer of petroleum products has continued till date.
I can also add that it is not only in the crude oil business that this national embarrassment is manifest. In this country, we export cocoa and import chocolate; export cotton and import textiles; export skins and hides and import shoes. I can go on and on to cite instances of this kind of stupid macroeconomics that leaves the country perpetually short-changed in bilateral trade relations.
Now, at Christmas, a season to show love, mercy and charity to even one’s enemies, the Nigerian government is delivering pain on its people. The suffering is getting unbearable as the fuel scarcity persists! Yesterday, I almost got lynched by one rough-neck simply because I came too low in the bargain for his 25 litres. I had unilaterally concluded that N200 per litre was a good price and then foolishly named N5000 instead of the N8000 he had named. “Oga comot here fast before I pour this fuel on you” he thundered at me with all seriousness. It was in the night and the spot was a little secluded. I obeyed and left even faster than he wanted me to do.
In all of this, no government person has spoken straight and sincerely to the people. In fact, those that are stepping forth are not even speaking. They are talking and talking anyhow too.
Alhaji Lai Mohammed who has apparently become an expert on climatology and economics of energy distribution has explained that temperatures in the world’s temperate regions are sub-zero and the demand for Nigeria’s imported petrol to augment what is available in those regions for heating purposes has increased. And that the Nigerian petroleum marketers ever driven entirely by profit have diverted products to those areas causing a shortfall in the domestic supply and the consequent scarcity being experienced.
Since it is not a one-all thing, Lai Mohammed is in effect asking Nigerians to brace-up for perennial fuel scarcity at the dawn of every winter season in Europe and elsewhere.
Even at that, Lai’s explanation sounded more plausible and easier to understand than the sophistry of the Minister of State, Dr. Ibe Kachikwu who since becoming part of the Buhari team, has solved the problem of domestic fuel supply a thousand times over by merely talking big. If Kachikwu is not decreeing the establishment of strategic reserves to stem supply shortfalls, he is decreeing the immediate resumption of production in the four refineries in Nigeria. Other times, Kachikwu will be unbundling and re-bundling the octopus NNPC to purportedly make it more efficient for global operations.
To escape scrutiny, Kachikwu couches his presentations in technical jargons that make it safer to listen to him in silence than to ask him questions for better understanding of what he means. In the matter at hand, he has also decreed the immediate take-off of production in the four refineries even as PENGASSAN which declared industrial dispute with an operator, Neconde Energy Services Ltd, over the sack of some of its members, offered a good opening to explain away the current scarcity.
On his part, President Muhammadu Buhari who is the substantive Minister of Petroleum says or does nothing outside ordering the NNPC to flood the market with products with immediate effect each time there are hiccups.
The NNPC itself has pinned down the unsettling scarcity saga to hoarding by marketers and panic buying by motorists. It also tries to allay fears that the current situation has nothing to do with rumoured plan to further hike the pump price in the New Year.
Such is the hollowness in government communication in Nigeria. But somewhere in the maze of the staccato lies the truth. And the truth is that the Buhari government is struggling badly to sustain a lie – non-payment of subsidy on imported petrol – it has created in the management of the downstream operations of the oil industry.
This was one area that gave the past administrations of the PDP, especially under Goodluck Jonathan a very bad name. To avoid being given a bad name, Buhari and his team abolished subsidy payment or at least gave the impression in the public space that the policy no longer existed. Instead of all comers going offshore to bring in products and then ask to be paid subsidy which is the difference between the cost of landing petrol in the country and the pump price at filling stations, the government through the NNPC decided to be the sole importer of fuel.
The NNPC does a very simple thing. It swaps the 445000 barrels per day domestic allocation for refined products abroad. The corporation has exclusive powers to manage the 445000 barrels daily anyhow on behalf of the Federal Government to ensure steady domestic supply of petroleum products.
Marketers are only allowed to watch from the sides or at most lease some for their storage facilities (tank farms) to the NNPC to warehouse imported products prior to distribution to sale outlets.
What is happening today can only be explained in the light of the loss of capacity of the NNPC, mainly due to its inherent inefficiency, to continue with the importation of fuel on behalf of the government and people of Nigeria. Put differently, the cooperation is no longer in a stead to exchange the 445000 barrels for enough fuel, especially petrol, for domestic consumption at the current pump price of N145 per litre.
This leaves all of us bruised and with one solution in the short term: bring back the marketers into importation and restart the subsidy payment regime. In the long run, prayers should be offered ceaselessly for the Dangote refinery with a capacity to crack about 700,000 barrels of crude per day into white products to come on stream and end all the shenanigans of domestic fuel supply. The latter option appears better because it promises to take out the NNPC and its choking inefficiencies out of the downstream matrix.
Both options, however, point to one ultimate solution which is the full deregulation of the downstream sector. In simple language, this means an increase in pump price from N145 to between N180 and N200 per litre.
Till then, enjoy your Christmas tomorrow and endure your fuel scarcity!
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