BusinessDay

‘Blame’ is new petrol as NNPC, oil marketers overwhelmed

 

While the NNPC Limited blames smugglers for the lingering fuel scarcity, oil workers unions blame the NNPC for poor supply, and independent marketers blame oil workers union for indiscriminate charges forcing them to hike prices.

In the mess that passes for petroleum products distribution in Africa’s largest oil producing nation, Nigerians are getting blames instead of petrol.

From a minister of petroleum who is both distant and aloof, to oil marketers who are charging a king’s ransom for a litre of petrol, blame is the new game and its consequence is spilling into mile-long queues and generating low-grade chaos.

Nigeria’s lingering fuel shortage is taking a toll on individuals and businesses and those tasked with finding a solution are trading blames. Critical sectors like trade and agriculture are slowing, small businesses are being eviscerated and tempers are fraying weeks to a general election that the situation could scuttle.

Mele Kyari, NNPCL CEO, speaking at a high-level security meeting on Tuesday, blamed smugglers for spiriting products across the borders. In a room full of security heads, oil marketers and other downstream operators, Kyari said the culprits were in the same room.

He accused depot operators of selling to filling station owners above the approved ex-depot price, insisting there was petrol in depots across the country.

Last week, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) claimed there was over 1.6 billion litres of petrol both on land and marine in a statement, blaming smugglers for the product scarcity.

“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. We are engaging and collaborating with the Nigeria Customs Service to address this issue,” the statement said.

Oil marketers say the problem is more nuanced and easily find others to blame. Mike Osatuyi, national operations controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), during an interview monitored on Arise Television, on Wednesday, blamed the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG), for indiscriminate charges leading to added cost on petrol litre prices.

“The problem we at IPMAN have is high transportation charges made by NUPENG. You are charged before your truck is allowed to come in to load. “Where do we put that money in the template? NUPENG is involved in the petrol scarcity,” he said.

The marketers also blamed the NNPC. “It is NNPC’s fault because they did not bring in the product. NNPC has now agreed to open up about three or four more depots for IPMAN loading products to their platform,” Osatuyi said.

Meanwhile, NUPENG in a recent statement has a target for its own blame game.

“More worrisome and biggest obstacle to usual effective and patriotic services is the depressing and frustrating antics of some unscrupulous marketers who are busy using this seemingly initial break in logistics from onshore vessels to exploit and extort the hapless public through racketeering and hoarding of the product,” said a statement signed by Williams Akporeha and Afolabi Olawale, NUPENG’s president and general secretary.

Nigeria continues to suffer the consequences of thinking that normal market rules do not apply to petrol.

On smuggling of the product, Osatuyi said smuggling is going on because the gap in the pricing is tempting. “If you buy fuel in Nigeria for N5million and sell it across borders for N15 million, that is profit. It only takes the fear of God for someone not to be involved.”

“If they want to stop smuggling today, NUPENG should come outside and tell their members not to drive trucks across the border,” Osatuyi said.

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But industry watchers say a government policy that relies on the “fear of God” to ensure compliance is not sustainable. Hence, poorly conceived government policies would continue to create arbitrage opportunities no matter how surprised officials pretend to be when they are exploited.

By selling imported petrol cheaper in Nigeria than other markets on the continent, with the country’s fluid borders, the government has made smuggling attractive. This illicit trade will continue with its attendant problems if Nigeria fixes its refineries but still sells petrol cheaper than its peers, one stakeholder told BusinessDay on Wednesday.

Lucky Irabor, an army general and Nigeria’s chief of general staff, speaking at the security meeting with the NNPC, warned marketers that the chaos in the sector would not be tolerated any further, threatening that the government was not handicapped and would take action.

But the rising spate of smuggling which the NNPC says makes its 60 million litres daily supply appear insufficient, shows these threats no longer scare anyone, as oil marketers like most Nigerians would, are exploiting the loophole, according to some industry watchers.

President Muhamadu Buhari who doubles as petroleum minister, last week set up a 14-man steering committee on petroleum products supply and distribution management to find a lasting solution to disruptions in the supply and distribution of petroleum products.

The committee met with industry players on Tuesday and some marketers are optimistic that a temporary solution could be found. The country has moved past temporary solutions, but that would suffice for a government whose head is believed to be marking time until May 29, when he retires to Daura.

While experts and analysts of every shade think that deregulation and full subsidy removal is the solution to the current mess, the widespread anger over a N300/per litre cost of petrol in some filling stations questions how prepared Nigerians are actually for subsidy removal.

Petrol sells in other African countries, including Ghana, Benin, Togo, Cameroon and others with smaller economies for between N400 and N500 per litre, but some still believe that Nigeria can continue its wasteful subsidy regime to keep the price of petrol low.

This is even when rising oil prices in the global market show that local refining would not significantly lead to cheaper petrol prices, a situation that creates another avenue for the government to blame Nigerians.

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