‘Hoarding of petrol is going on unabated at the private depots and IPMAN wants the pump price of petrol fixed at N200 per litre as a condition to make fuel available. Will the federal government buckle?
The current long fuel queues and prolonged crisis in the downstream sector of the Nigerian oil industry seem to be heading to a climax of an official increase in the pump price of premium motor spirit (PMS) a.k.a petrol.
The independent petroleum marketers have always used hoarding and artificial scarcity of petrol as a means to force the government into increasing the pump price of the commodity.
The method is simple: the marketers will hoard fuel, the citizens groan over long queues or buy at the black market. When they are fully stretched, the citizens will start saying ‘Please let’s have fuel even at a higher price. They will add ‘it is better to have fuel available at a higher price at the pumps than to buy it at black market and experience the trauma that comes with fuel scarcity. This method invented by IPMAN has been used several times over and the marketers have always had their way.
To confirm that there is hoarding of fuel currently going on, if the federal government should increase the pump price of petrol to N200 per litre today, there will certainly be fuel the tomorrow everywhere in Nigeria.
To worsen the situation, there is a near complete absence of enforcement of the law as the main regulatory agency, the Nigerian midstream and downstream petroleum regularity agency (NMDPRA) formerly DPR, joins other Nigerians to watch marketers hoard fuel at will.
The initial reason for the latest round of fuel scarcity is that flood has taken over and blocked the roads in Kogi state. That was about two months ago. The floods are now over. The roads are clear but fuel scarcity still persists.
It is instructive to note that nobody has been prosecuted or convicted for hoarding fuel since records began.
As if to give a tacit support to the push for an increase in the pump
price of fuel, the group chief executive of the Nigerian National Petroleum Corporation ltd NNPCL Mr Mele Kyari has admitted that it is no longer possible to sell petrol at the official pump price of N175 per litres. There seems to be a concurrence of opinion between the NNPCL and the independent petroleum marketers association of Nigeria (IPMAN) as the association’s secretary had hinted that petrol cannot sell for N175 per litre and N210 is the realistic benchmark for a litre of petrol. Mr Kyari obviously has good and sincere intentions but the fuel scarcity problem seem to defy all logic as it heads to an official price increase. A one-off removal of fuel subsidy will not solve the problem as it will lead to a spike in inflation. The federal government should cut down on waste to fund the fuel subsidy.
The current scenario and concurrence of opinion between major stakeholders in the industry can only point to one direction: an increase in the pump price of return is staring us all in the face. Quite honestly, the official pump price of fuel may jump from N175 to hit N200 per litre by December this year. All the indicators today point to this fact.
As a matter of fact, some stations in Abuja and Lagos are already selling a litre of petrol between N200-N250 per litre. Yours truely actually bought a litre of petrol at N250 at a station in Abuja. I simply kept asking and speaking to no one in particular ‘where are the regulators to enforce the law?. Why is a litre N250’ when the official pump price is N175?Nobody paid attention to my question. Motorists on queue at the station simply want to buy fuel and beat it. When I tried to get a response, the fuel attendant simply said ‘Oga we no fit help you. Na just to sell fuel be our own. At that point I kept my questions to my chest.
I felt part of my exasperation filter away when I did the maths:
At the black market, I usually buy a 10 litre keg of petrol at N3500 which translates to N350 per litre. This means buying fuel at N250 per litre from the pump was actually a ‘good deal’ as it saved me N100 per litre. Coupled with the risk of stepping on a contaminated fuel at the black market, I had to see the good side of N250 per litre at the pumps.
If the federal government announces N200 as the pump price of petrol of a litre of PMS, the marketers may not stop at N200. They may force it up to anywhere between N200 – N250 per litre in line with their persistent nerve to maximise profit and their continuous call for a full deregulation of the downstream sector of the Nigerian oil and gas industry to allow for market forces of demand and supply to determine the price of petrol. If the marketers are allowed to have their way, petrol will sell for N500 per litre in Nigeria even with the federal government paying huge subsidy bills to the marketers.
Normally, the marketers forget that they receive subsidy on petrol and kerosene when computing their so-called ‘landing cost’ and ‘ex-depot’ prices that are said to be N448 and N148.17 respectively.
Don’t forget that in places like Kano and many rural areas in Nigeria, marketers have been selling petrol at between N200 and N350 per litre for several years now.
WHY FUEL SCARCITY PERSISTS UNABATED
The latest round of fuel scarcity which started at the beginning of this year stems from a mix of the following:
1. Artificial hoarding of the commodity by marketers with a view to forcing the federal government to increase the pump price of fuel to at least N200 per litre
2. Private depots are running the show because the atlas cove, NNPC’s facility for storage and distribution of petroleum products is down and almost out due to suspected deliberate fire incident in 2006 and an audacious attack by the so-called Niger Delta militants in 2009 which destroyed the manifold between the vessels and the jetty.
3. An increase in the landing cost of fuel which stemmed from fluctuations in foreign exchange. The marketers include this reason to their list of excuses for wanting the governments officially increase thd price of petrol.
4. Very weak regulatory and enforcement framework. Absence of sanctions on marketers who hoard fuel at the detriment of the public interest.
Unless checked, the lack of enforcement will bring the downstream sector to its knees and innocent citizens will bear the brunt of arbitrary unofficial increase by marketers.
PROPER ENFORCEMENT OF THE LAW WILL END FUEL SCARCITY IN NIGERIA.
If those who hoard fuel to punish innocent Nigerians are arrested and prosecuted, fuel will be available at controlled prices at the pumps.
Enforcement is the way to go. For example, when bureau de charge operators hoarded the US Dollar recently and created artificial dollar scarcity, the economic and financial crimes commission (EFCC) swooped in and behold, the kidnapped dollar was released leading to a stronger Naira. The USD lost over N200 within the period of arrests of the black market bureau de change operators. The same method should be applied to petroleum marketers who hoard fuel. Any station that hoards fuel or refuses to operate all the pumps should be closed down, it’s owner arrested or declared wanted and prosecuted when apprehended.
If the federal government smokes out the petrol hoarders, they will make fuel available without question.
There is also the need for the federal government to expedite action and fix the atlas cove in Lagos so as to break the monopoly of the private depot operators who fix arbitrary and high prices to the marketers who in turn transfer these high prices to innocent Nigerians.
