Fuel scarcity may dampen economic performance in the first quarter, although the overall impact will be determined by the duration of the shortage, experts said yesterday.
Finance and economic analysts who spoke with The Nation said the shortage of Premium Motor Spirit (PMS), otherwise known as petrol, would affect the economic performance.
After two weeks of severe fuel shortage, queues remain in Nigeria’s major economic centres despite efforts by the Nigerian National Petroleum Company (NNPC) to bridge the supply chain disruption caused by the importation of toxic fuel.
Nigeria’s Gross Domestic Product (GDP) dropped from 4.03 per cent in the third quarter of 2021 to 3.98 per cent in the fourth quarter of 2021.
President, Chartered Institute of Stockbrokers (CIS), Mr. Olatunde Amolegbe, said the contaminated fuel crisis has caused some supply chain disruptions to businesses.
According to him, man-hours have been lost in queues for fuel and there have been increased transportation charges as transporters adjusted prices.
Organisations that also rely on trucking goods have been minimally impacted as most trucks use diesel and gas.
“Generally, fuel scarcity ultimately affects business activities and if it lingers for too long, it will impact negatively on companies’ earnings by the time the first quarter reports trickle in,” Amolegbe said.
He said the extent of the impact of the fuel shortage would be determined by the resolution of the fuel scarcity as well as the recovery of companies and individuals impacted by the scarcity.
“Therefore, if the crisis could be resolved quickly as it seems, there might be just minimal impact on earnings. COVID-19 pandemic has already conditioned many organisations to work remotely. It is easy for such organisations to activate this mode during the period of fuel shortage.
“Another issue is the menace of vehicles malfunctioning as a result of the bad fuel. How would such vehicle owners be compensated?” Amolegbe said.
Managing Director, APT Securities and Funds, Mallam Kasimu Garba Kurfi, said prolonged fuel scarcity could impede economic performance.
“It depends on how long it takes, if resolved timely, it may not have much effect, otherwise, it may affect the prices of many things, especially food items, and retard the recovery of the economy,” Kurfi said.
Managing Director, Globalview Capital Limited, Mr. Aruna Kebira said concerted efforts by the NNPC and improved information management could minimise the impact on the economic performance.
“The fuel crisis we are experiencing now is not like we used to experience. There was a mix-up in the quality of fuel delivered and NNPC is coming out every day with information to douse the tension,” Kebira said.
According to him, the impact may not be pronounced on corporate performance as most companies depend on diesel to run their alternative power supply.