Barely hours after Nigeria’s new President, Bola Tinubu, said “fuel subsidy is gone”, long queues resurfaced across petrol stations in major cities, especially Lagos, as some stations began shutting their pumps.
BusinessDay correspondents visited several petrol stations across different parts of Lagos and found long queues at the filling stations dispensing petrol, from Ikorodu to Ikoyi. Some others that opened in the morning began to shut their pumps in the evening.
One of our correspondents who was on a queue at G&G Filling stations in Shomolu Lagos was the last to be attended to, when the manager came in and declared they were no longer dispensing.
The manager declined to comment and provided no reason.
“Scarcity is coming, or they are about to create one,” said a cab driver who simply gave his name as Ini. He had waited in line for over 40 minutes and was unsure he would get enough supplies.
NNPC stations in most parts of Lagos were dispensing but they had large queues, an unusual experience during a public holiday. Many were seen hurling 50-litre cans to buy, apparently for resale on the black market.
Prices sold at most petrol stations remained N195 for independent marketers while NNPC stations sold at N185. Few hours after Tinubu’s speech, prices jumped across major cities, including Lagos, Port Harcourt and Aba.
Around Abuja, checks showed that sale of petroleum products continued normally in stations around Kuji and the Central Business districts by midday. Filling stations around lugbe road, Apo Bridge, Area 1, Gudu, Utako and Berger were open and dispensed fuel normally. By evening, the situation had worsened. Many petrol stations were not dispensing and those that were have raised prices.
Enquiries in Ogun, Kano and Port Harcourt showed there were no significant signs of shortages by mid day but by the evening, the situation had changed as more queues emerged.
When contacted, oil marketers told BusinessDay that products were still available and nothing had significantly changed prior to Tinubu’s speech. Many petrol station owners were reportedly hoarding the product in anticipation of a price increase.
Tinubu, in his inaugural speech on Monday, said: “Fuel subsidy is gone.”
He said: “We commend the decision of the outgoing administration in phasing out the petrol subsidy regime, which has increasingly favoured the rich more than the poor.
“Subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall instead re-channel the funds into better investments in public infrastructure, education, health care and jobs that will materially improve the lives of millions.”
Independent marketers who are unsure of what the outlook would be may be hedging their risks by shutting in their pumps and waiting on developments in the coming weeks.
The Petroleum Industry Act passed by lawmakers in August 2021 provided for the removal of petrol subsidies and a full deregulation of the petroleum downstream sector.
Former President Muhammadu Buhari failed to implement the law and differed its implementation by 18 months. The government made provision for petrol subsidy for only the first half of 2023.
Analysts had called for the removal of subsidy several times but Buhari’s fear of a popular revolt held his hand.
“Fuel subsidy rewards only the elites, middle class and the rich in Nigeria,” says Bongo Adi, an economics professor at the Lagos Business School last week.
Adi noted that the fuel subsidy that is supposed to help the poor actually helps in intensifying their poverty and misery.
By the end of this tenure, the subsidy had gulped over N11 trillion, an expenditure that outstrips spending on health, education and security.
The Tinubu administration would contend with labour unions who last week, under the aegis of the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG), issued a statement.
“We are delighted that our concerns about the dependence on importation is being addressed by the recently commissioned Dangote refinery, but we are quick to add that the administration of Bola Ahmed Tinubu should not rush into taking any decision on the policy change until the products are actually in the market from the Dangote refinery,” the union said.
NUPENG said that the new administration should make all public refineries functional and should not because of the anticipatory products availability from Dangote refinery.
“It’s also very imperative for the new administration to have robust engagement and discussion with all key stakeholders, most especially the organised Labour on ways and means to mitigate these consequences (of subsidy removal) on employment, inflation and living conditions of the working people,” it said.
The group said any major policy decision on the removal of the subsidy on this very important economic item should be taken with extra caution in view of the enormous implications and the impacts on the overall economic activities of the nation and other unintended consequences on the ordinary citizens considering the socio-economic importance of the product.
However, this warning fails to take into consideration that Tinubu did not remove the petrol subsidy but only inherited a government where budgetary provisions to pay the subsidy no longer exist.
This situation has the potential to pitch both camps into a war of attrition, a position that leaves an administration with a weak mandate vulnerable.
With subsidy removal, Nigerians would see petrol prices rise to at least N400 per litre.