• Saturday, June 22, 2024
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BusinessDay

More misery awaits Nigerians as fuel queues persist, subsidy to rise

Petrol scarcity persists, drains pockets

The frustrating petrol queues are to persist in Nigeria while the cost of fuel subsidy could grow beyond N5trillion annually as more misery pile up for ordinary Nigerians in the months ahead.

That’s the grim prospects being painted by both economists and executives of the Nigeria’s downstream oil industry given the abdication of responsibility by the government.

The rising international prices occasioned by the Russian attack against Ukraine means that even for customers with good reputation in the market, refined products are scarce and where available at a premium and it is even worse for Nigeria that has no good record of paying its supply partners promptly. It was for its bad record that Nigeria turned to the now massively abused Direct Sales Direct Purchase (DSDP) mechanism that led to the importation of bad petrol into the country in January.

This rising international crude oil price also means that it is now even more lucrative to smuggle fuel across the Nigerian borders. “From north to south to the west, the sale of petrol across the borders is booming”, said one official. “There is now even more margin to bribe security agencies and more margin to be made by the receivers of the smuggled petrol on the other side.”

Read also: NNPC distributes 381.88 million litres, yet Nigerians groan on access to Petrol

The second reason why the fuel queues will persist is that owners of trucks in the country are pivoting to distributing diesel where they can better price haulage fees when compared to the fee charged for petrol which is fixed by the government. According to one senior official, “we are seeing significant movement away to diesel by truck owners. Many of the truck owners who are still carrying petrol are there because there are other games they are playing.”

Thirdly, operators of the downstream sector have mostly lost faith and confidence in the government and its agencies and the situation today is, “one in which everyone does whatever he or she likes” according to one official.

Private sector players are seeking to maximize profit, leading to arbitrary increase in the price of petrol across the county and even the government officials who should regulate are seeking their own cut, BusinessDay has learnt.

Our reporters saw letter written by a branch of the oil workers union, NUPENG asking that it be sold petrol so it can get into the game as well. It would seem everyone is hoping to play the game, from ordinary Nigerians who are having to use more petrol than they would if the price they paid reflected the reality to the government who knows the right thing to do but has chosen not to do it.

In the mess that the country is in, NNPC desperate to get petrol out to the people, is said to be pondering supplying the market with excess petrol by a level as high as 150 percent according to one estimate.

This means that the subsidy bill will rise further, pushed up by this excess supply over demand and also by the factor of rising international crude oil price.

The resident World Bank representative, Shubbam Chaudhuri said in a press report Monday he expects the subsidy bill for 2022 to exceed N4 trillion at the international crude oil price of $95 a barrel. With oil price climbing close to $140 Monday that subsidy level will rise sharply to near N6 trillion.

As the subsidy bill rises, life will not get better for the ordinary Nigerians as they must now deal with the astronomical surge in the price of diesel to around N550 a litre.

Worst hit are small businesses around the country whether they are in own shops or operating out of malls where they now must pay higher service charge to the mall managers. This could prompt job losses.