BusinessDay
NigeriaDecides2023

Solution to current petrol scarcity is not a rocket science

Despite the Federal Government’s recent hike in the price of the Premium Motor Spirit (PMS), otherwise called petrol, and the rebranding of the Nigerian National Petroleum Corporation (NNPC) to NNPC Limited, long queues being witnessed at filling stations across the country have remained unabated.

The truth is that it is not rocket science to fix the distortion in the oil sector. The underlying cause of the persistent fuel scarcity in Nigeria is the government’s unwillingness to completely deregulate the oil and gas industry and create an enabling environment for private sector participation.

While we urge the president to ensure good governance, we are convinced that ensuring full deregulation will bring about productive incentives to this critical sector of our economy.

But to allow the NNPC to continue as the sole importer of petrol in a government regulated market is economic madness

It is foolhardy to deny that the queues have become an embarrassment not just to the government but also to Nigerians who now spend productive hours waiting for their turn to buy petrol.

Opponents of full deregulation have argued that it would lead to price increase as the government would no longer be able to fix the selling price of the product. But this argument holds no water.

In a fully deregulated situation, marketers, governments and businesses could bring in petrol at their own cost and sell at any price they deem fit.

No matter the depth of complexity of any problem in a country, there are options of solutions that can be mobilised to resolve them. Problems persist not for want of ideas to solve them but because someone is failing to make a tough call on the right solution.

What’s the big deal in getting the refineries working? Does it make sense to produce a product and import the same? The truth is; you can’t give what you don’t have.

Government has no business running any business. This undeniable fact is the reason things are not working well in Nigeria, especially in the oil and gas sector of the economy.

The petroleum downstream sector is a huge business that should be weaned off government control. Crude oil accounts for over 70 percent of government revenue, but that doesn’t mean the government should continue to dictate what happens in the sector.

A country where the NNPC Limited still imports petrol for everyone is not a serious country.

It is common knowledge that the NNPC lacks the capacity and the storage facilities to continue with this herculean endeavour. Why then wouldn’t we allow the private sector to venture into the business, import petrol and sell as the market dictates?

Petrol is a product. Economics says if Mr. A, B, C and D all sell the same product, competition will someday make Mr. C sells at a lower price to beat Mr. A. It’s called market forces. Demand and supply are what drive any economy. Not government regulation.

Yes, petrol pump prices could spike initially in a deregulated market, but someday, competition could force pump prices of petrol down like every other product in the market.

Besides, the NNPC would also be a player in this market and could decide to sell its own petrol at government subsidised, friendly price. But to allow the NNPC to continue as the sole importer of petrol in a government regulated market is economic madness.

We doubt if anyone can point to any other country that exports crude oil and imports the finished product. Nigeria is a sorry case, literally. We have refineries in Warri, Port Harcourt and Kaduna that can cater for our domestic needs but corruption has made them comatose. In any case, the refineries are probably so outdated right now that even a turnaround maintenance can’t bring them back to life.

Read also: Petrol prices in Nigeria rise as subsidy regime cracks – EIU

The reason we continue to have scarcity is because NNPC imports petrol. Sometimes, the product is inadequate or remains at sea for God knows how long, or is subject to the whims and caprices of the international market.

Private firms should be handed licences to run modular and standard refineries alongside government ones. If we have as little as 100 refineries serving the domestic market, we won’t be where we are now.

On the other hand is the act of sabotage on the part of the independent marketers who had often been accused of hoarding the product waiting for a period of scarcity to sell. In other climes, such actions are punishable offences, but in Nigeria, nothing happens. Unfortunately, it is termed “business as usual.”

Also compounding the problem is the activities of petrol tanker drivers who divert products meant for the Nigerian market to neighbouring countries because it’s more profitable selling Nigerian petroleum products in Benin or Niger republics than selling the same in a government regulated market here in Nigeria . This has been going on for years and it’s something we must stop.

Why do we need tankers to lift petrol from Lagos when we can distribute petrol through sophisticated and secure underground pipes across Nigeria? Until the corporation proves to the independent marketers that it can do this business without them, Nigeria won’t get out of this scarcity problem.

While we restate our call for full deregulation of the oil industry, we equally call on the Economic and Financial Crimes Commission (EFCC) and other relevant government agencies to immediately arrest and prosecute all those sabotaging our economy to serve as a deterrent to others.

Otherwise, the current situation will continue to flourish to the detriment of our collective good.

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