Regulator blames petrol scarcity on cross-border smugglers
The current distribution hitch is heightened by activities of cross-border smugglers, who divert petrol meant for the Nigerian market to neighbouring countries where petrol prices are significantly higher than Nigeria’s regulated price, says Nigeria’s midstream regulator in a statement on Friday.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) also said it is engaging and collaborating with the Nigeria Customs Service to address the issue.
Fuel scarcity which has persisted across the country since last year, has worsened within the past three months leading to long queues across petrol stations and hike in food and transport costs.
“The price arbitrage between Nigeria and neighbouring countries has continued to grow due to inflation and the regional impact of the Russia- Ukraine conflict on the global energy value chain including international freight rates and coastal vessels charter rates,” it said.
The regulator also said it has sufficient petrol of over 1.6 billion litres both on land and marine, according to a statement by the authority. But this will offer little comfort to thousands of Nigerians who spend the night at petrol stations queuing for the product.
Read also: Oil union blames marketers, FG for petrol scarcity
According to the statement, the Nigerian National Petroleum Company (NNPC) has made a firm commitment to supply more volume of petrol for the months ahead to guarantee national energy security and nationwide availability at the government-regulated price.
The regulator also said that ongoing government effort to rehabilitate strategic Nigerian roads ahead of the rainy season has necessitated the rerouting of tanker trucks conveying petroleum products to alternative roads, therefore increasing transit time and associated cost of product transportation.
The first measure is a modest adjustment in the cost of product transportation to cater for the impact of high diesel prices on transporters while making special provisions of diesel to marketers at a reduced price.
The regulatory authority and NNPC also plan to automate products’ sales interface. It also plans to adopt a monitoring system in collaboration with government security agencies for the distribution of products to retail outlets
They also plan to extend operating hours both at the loading depots and some selected filing stations; rehabilitate critical fuel distribution road network through the FG tax credit scheme by the NNPC; and conduct regular stakeholders’ engagements; among others.
“We have reinforced our monitoring teams and appropriate sanctions to checkmate the activities of erring marketers who are distorting our planned product flow to designated outlets in order to profiteer from price arbitrage have been emplaced,” the regulatory authority said.
“As a medium to long term measure, cost-efficient means of transportation, including Autogas conversions and pipeline rehabilitation, are being implemented. This will be complemented by end-to-end process automation across the value chain.”
NMDPRA appreciates the collaborative efforts of some patriotic oil marketing companies who, despite the glaring incentives to engage in illegal price arbitrage, have stood steadfast and operated responsibly within the approved pricing limits.
“We would like to reassure all Nigerians that NMDPRA as a responsible regulatory authority would continue to work passionately to ensure energy security and continuous collaboration with all the relevant stakeholders to restore normalcy in the petrol supply and distribution network within the shortest possible time.”