The current bottleneck in the supply of Premium Motor Spirit (petrol) across the country is scandalous. As Africa’s largest producer of crude oil, fuel shortages for many months, especially during the Christmas and New Year holidays, reflect the dysfunction of Nigeria’s public administration and economy.
But this is not new, because there has been a recurring shortage of gasoline for more than three decades. About four months ago the handicap resurfaced, and has defied all logic and solutions. The government and its agencies are unclear, making disconnected statements and uncoordinated moves. Ridiculously, the latest was the order by the State Security Service to the Nigerian National Petroleum Company Limited, the Independent Association of Petroleum Marketers of Nigeria, the Major Petroleum Marketers Association of Nigeria, the Association of Depot and Petroleum Marketers of Nigeria and other stakeholders to resolve the current fuel crisis. in 48 hours!
Others “targeted” by the service were the Nigerian Association of Road Transport Owners, the Nigerian Union of Petroleum and Natural Gas Workers and the Union of Oil Tanker Drivers.
The secret police vowed to go after the traders if the queues did not disappear within 48 hours. The queues initially seemed to heed the strange directive, but the respite did not last as the shortage has taken on a serious dimension and frustrated Nigerians are spending many precious hours, some nights, at the distribution stations.
The SSS explained that its intervention was to avoid security impacts or negative dimensions that could arise from the current shortage of gasoline, adding that it was being proactive by limiting what could cause promotion in the country during the Yuletide.
It is a wrong way to solve a serious national problem; a domestic intelligence service cannot decree the abundance of a scarce commodity. Moreover, such agencies work in secret, and if he knew or suspected sabotage, his mandate was to work with the appropriate agencies to investigate, arrest, and prosecute lawbreakers. By issuing an ultimatum he cannot enforce the basic trivialized economic challenge.
Traders are selling the product at between N175 and N300 per liter in defiance of the regulated pricing regime, implying that it is out of control. Some private depots in Port Harcourt, Lagos and other cities have increased the ex-deposit price to N235/litre from the approved N148.17/litre.
Defending his confusion, SSS spokesperson Peter Afunaya said: “Some may want to ask what is our business in the fuel issue? We dare say that the service is mandated to detect and prevent crimes and offenses that seek to endanger internal security, as this is no exception. “. It’s a crude tactic; the SSS went beyond its brief. It can ban saboteurs; but it can’t issue ultimatums to business operators. The agency is not an oil regulator.
The scene is further evidence of the disarray in the regime of President Major General Muhammadu Buhari. A serious and coordinated government would have an interagency effort, effectively coordinated and with tasks assigned to each agency. In that case, the SSS would not have been the one issuing ultimatums to private business operators.
The NNPC’s assurance that it has about 1.9 billion liters of fuel, which can last beyond the Yuletide period, is not seen in the market. No wonder, as the recent announcement of NNPC’s transformation from a state monopoly to a limited liability company has failed to lift it from the cesspool of corruption, inefficiency and opaque operations.
It has sunk all four of the country’s refineries, but continues to sink billions of dollars, some of it borrowed, into supposedly fruitless Turn Around Maintenance. In recent years, NNPC has been the sole importer of refined petroleum products in deals that have fueled debates over costs and the exact volume imported and distributed. Its inefficiencies are costing the country dearly. Irrationally, the government allows itself to be the sole determinant of the subsidy it pays.
Many of its 21 fuel depots across the country are depleted. Instead, private warehouse owners are laughing all the way to the bank by charging exorbitant storage fees for the products they release to marketers’ outlets on their behalf. According to reports, it owes $90 million to indigenous shipowners whose daughter ships load the product from motherships docked offshore to take it to private warehouses.
The real problem is the involvement of the state in the lower sector and the mere refining locally. Nigeria has the capacity to produce 2.5 million barrels of crude per day and the current OPEC production quota is 1.74 mbpd; It is the 14th largest producer in the world in 2022 according to the US Energy Information Administration. It therefore has no business importing refined products. Instead, it should be a major exporter and a center for refined products in West, East and Central Africa.
But the country sabotages itself by maintaining four state-owned refineries that have not produced in recent years, have suffered losses for more than three decades and succeeded in driving the private sector out of domestic refining except for the valiant Dangote Group, whose 650,000. barrel day complex will be completed soon.
A state should not be a regulator and an operator in the same market. The government should facilitate an enabling investment environment that will lead to large inflows of local and foreign capital to make the country a major international refining hub. It should leave the bottom entirely and limit itself to regulation and liberalization.
Being a monopoly at the bottom, NNPC is withholding money from the Federation Account under the pretext of costs incurred. The people suffer on all fronts; monopoly ensures scarcity and discourages a more efficient private sector and competition. The tax payer then pays heavily for this, and next, the revenue from the NNPC deliveries to the three tiers of government is lost.
He withdrew the funds to be sent to the Federation Account to cover petrol subsidy for seven consecutive months until September 2022. Also, the country is said to have lost about 22.68 billion in foreign exchange earnings due to the crude exchange regime in the last 18 years. the months Also, more than N4 billion in subsidy is paid out this year. This national stupidity must stop.
There is no alternative to privatization: refineries, warehouses, pipelines and other downstream assets should be privatized. There should be an emergency national program to stimulate private investment in estates to avoid the disastrous NNPC monopoly for a private monopoly. Only competition can guarantee efficiency, market-friendly prices and innovation.
Meanwhile, Buhari should stop treating the deficit lightly. As president and defacto oil minister, he should suspend his endless foreign trips and coordinate an interagency effort to resolve the current supply blockade.