Tag: Fuel crisis

In the view of analysts and stakeholders in the petroleum sub-sector, the lingering fuel crisis being experienced across the country may take awhile to abate as the federal government is faced with many contending issues at the moment, reports Bukola Aroloye

Will the protracted fuel crisis being experienced across the length and breadth of the country ever abate? This simple question has remained one jigsaw puzzle begging for answers.

Investigation by The Nation revealed that the lingering scarcity of refined petroleum products, especially petrol, may continue across the country in the future because marketers have stopped importing the products due to the reluctance of the banks to provide them with credit.

At the last count, the amount being owed all the oil marketers by the federal government was N291.7bn.

It was gathered that the refusal of the banks to provide credit to the marketers had adversely affected the business of some of them, as many were already contemplating leaving the venture.

Sources in the sector, who spoke with The Nation, said that the refusal of the banks to provide additional loans to the marketers could be due to the federal government’s delay in paying the huge subsidy debt being owed the fuel importers.

Although they admitted that the Nigerian National Petroleum Corporation was currently the sole importer of petrol, the quantity of fuel being consumed in the country was so high that the NNPC might not be able to handle it solely.

“Banks are refusing to give some marketers loans to import petrol and they are hoping that the present administration will intervene, particularly by paying the huge subsidy debt, because the NNPC alone may not be able to shoulder all the fuel need of Nigeria,” an official at the Federal Ministry of Petroleum Resources, who spoke to our correspondent on the condition of anonymity, said.

Confirming this, the Executive Secretary, Depot and Petroleum Products Marketers Association, Mr. Olufemi Adewole, told our correspondent that members of the group were not importing petrol again, because the banks had yet to open credit lines to them.

He said, “We are still being owed, and as of May 29, the total debt owed all marketers was N291.7bn. Banks have yet to fully reopen credit lines to all our members, hence we have not been importing as much as we should.

“At DAPPMA, what I can tell you is that since the tanker drivers called off their strike, we have not resumed importation. Our money is still outstanding and, in fact, banks have not fully opened their credit lines to us.

“Meanwhile, we are aware that the NNPC has been coming up with a lot of statements and we still can’t say whether it has products or not. But on our own part, we have not been paid and we have not been importing as much as we should.”

Recently the NNPC said it had enough stock of petrol to service the country for 25 days at a national consumption rate of 40 million litres per day, adding that it had stepped up product distribution to petroleum marketers and its retail outlets across the country.

Despite these assurances, the scarcity of petrol has continued in Abuja, Lagos and other parts of the country. The Independent Petroleum Marketers Association of Nigeria (IPMAN) recently said that its prolonged in-house tussle for control of its affairs by various groups and power blocs contributed in no small measure to the scarcity of petrol and ongoing mess in Nigeria’s downstream petroleum sector.

IPMAN said in Abuja that in as much as its members own and manage up to 60 per cent of petrol retail outlets in Nigeria, their leadership crisis ensured that they were mostly left out in the distribution of petrol to marketers in the country.

Its National President, Mr. Obasi Lawson, said at a briefing that the crisis in IPMAN prevented most members of the group from accessing petroleum products, alleging that the association’s share of petroleum products were diverted to other groups in the downstream petroleum sector due to its in-house crisis.

“IPMAN is a major player in the downstream subsector of the oil and gas industry. We control over 60 per cent of the retail outlets across the country and we have over 10,000 members with over 30,000 petrol stations. What the masses suffered because of fuel scarcity was largely caused by the crisis in IPMAN,” Lawson said.

“But the suffering started as a result of this crisis and this is because we control 60 per cent of the retail outlets.

“During the crisis we were not getting products as and when due, the products that were supposed to come to us were diverted to MOMAN and DAPMAN. And as at that time most of our petrol stations were not selling.”

“It is not that we are not getting the products, but we get them at exorbitant prices and we have to transport it ourselves. It wasn’t the fault of the PPMC (Pipelines and Product Marketing Company), but it was because we were not united. They prefer giving it to MOMAN and DAPMAN that were united,” said Lawson.

Fuel scarcity looms again

Another round of fuel scarcity may after all be on the way, if nothing is done to resolve the lingering crisis between the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) and the Chevron management

The union is asking for, among other things, the revisit of the Collective Bargaining Agreement (CBA) reached between the management of Chevron and the union in 2012 and again the reinstatement of the executive chairman of the branch of the NUPENG in Chevron, Comrade Shabi Dada, who it said was removed from office one year ago for no just reasons as well as the issue of categorisation casualisation.

Speaking with journalists in Lagos at the weekend, the Lagos Zonal Chairman of NUPENG, Comrade Tokunbo Korodo, said the sacking of the executive chairman of the Chevron branch was an affront to the union, expressing disappointment that all the calls by the union for his re-instatement proved abortive

He informed that the contract workers of Chevron had been on strike for nine days now in order to press home some of these demands from the management.

According to him, before now, the contract workers had been under the control of six contractors about three years ago.

On the other hand, the existing Collective Bargaining Agreement (CBA) with the former contractor was cancelled and the one in existence now was imposed on the union, adding that there was no contribution of the union to it

He said: “We have been agitating for the revisit of these issues and they also made us understand that the contract is also coming to an end by December this year.

“As this is still going on, some of our members have been pencilled down for termination of appointment and retirement. There is need to have a vibrant CBA that will take care of the benefits of members. All efforts to have a listening ear from the management of Chevron proved abortive, hence the agitation by the workers

“It took them complete seven good years before we were called for a meeting and even when we attended the meeting, no concrete result came out of it.”

“If nothing is done, the union will be forced to ask other branches of the NUPENG to embark on strike to press home these demands, and there would be another fuel scarcity as a result of this.”

Secretary, Chevron Contract Workers Union of the NUPENG, Segun Odukoya, disclosed that some people had been on casual employment for the past twenty years.

He said there is no vacation, overtime or medical attention given to the workers.

“We say no to categorisation; we say no to casualisation; and we say no to intimidation and victimisation. The NUPENG will always fight for the rights of the workers”, he said.

Why fuel crisis won’t abate

Giving a fresh perspective on the fuel crisis imbroglio, an economist, Henry Boyo said that it would probably be more difficult to find a contrary view to the above popular perception.

According to Boyo, the widely reported ‘extreme’ annual subsidy values seem to also confirm that these fuel barons make a kill on the back of fellow Nigerians.

“Despite several allegations that marketers collect billions of Naira as refund of subsidies on fuel supplies which were never delivered, no convictions have, surprisingly, so far resulted from EFCC’s tenuous efforts.”

Speaking further, Boyo said: “It will be useful to examine the process of fuel importation more closely to actually identify the real beneficiaries in this business. Indeed, the major oil marketers, Total, Mobil, Oando, Conoil, NNPC inclusive, and a few others have not been fingered for collecting subsidy with fake import papers.”

However, it may be more difficult to vouch for the innocence of the motley subset of hundreds of indigenous independent marketers, as this class also accommodates the ubiquitous briefcase importer, who is clearly, a more footloose buccaneer, Boyo stressed.

Sadly, much to the chagrin of the public, the snail speed procedure for prosecuting financial crimes, may, postpone judgment day for fuel subsidy racketeers, while a judicial process that is allegedly compromised may actually also set the guilty free. However, let us examine, hereafter, how profitable the fuel supply business is for bonafide importers, who have to borrow billions of dollars and Naira to finance their operations.

However, Boyo said  the premium on each dollar sold may well exceed N10 per dollar, whenever dollar is relatively scarce and the parallel market exchange rate is over N220 while official rate remains below N200/$ as is currently the case. It is also not immediately obvious to non business persons, that the same banks lend fuel importers the trillions of Naira which they subsequently exchange for dollars; presently, marketers would pay between 17-20% interest for the trillions of Naira borrowed for fuel imports.

Sad at the persisting scarcity of petroleum products in the country, especially in the South East zone, marketers at the Aba depot in Abia State, under the aegis of concerned members of the Independent Petroleum Marketers Association of Nigeria (IPMAN), have urged President Muhammadu Buhari to investigate the problem.

In a statement, the Aba Depot IPMAN Chairman, Levi Amah, said it is worrisome that contrary to the assurances by officials of Pipelines and Product Marketing Company (PPMC), members still face difficulties procuring the products, since they have to get them from outside the zone.

“For the umpteenth time, officials of PPMC have assured us of availability of products but we did not see any. This makes us travel as far as Lagos, with its attendant risks, to buy products that we would ordinarily get in Aba.”

Amah also described as untrue and flimsy the statement by some people that the scarcity was being caused by the old and rustic pipelines conveying the products from Port Harcourt to Aba.

Strident calls for removal of petroleum subsidy

There have been strident calls for the removal of subsidy with many stakeholders arguing that it is the way to go.

Not happy with the way things are going on the sector, they have called on President Muhammadu Buhari to revitalise Nigeria’s refineries and build new ones as a means of ensuring the regular and adequate supply of locally produced petroleum products.

The best way to eliminate the recurrent scarcity of petroleum products in the country, many of the analysts have contended, is to remove subsidy outright.

It said the subsidy removal would end the importation of petroleum products and its consequent sharp practices, as well as create jobs.

They urged government to pay attention to agriculture and the solid mineral sector as a means of diversifying the economy and generating more revenue.

The analysts pleaded with the government to engage adequate global coalition to tackle the security issues.

In what many observers have described as Nigeria’s worst nightmare in recent times, several businesses caught in the web of the protracted fuel crisis are still counting their losses running into hundreds of millions, reports Ibrahim Apekhade Yusuf

FUEL crisis is not new in this part of the world. But to many Nigerians who have had to endure the bitter pill of the lingering fuel scarcity these past weeks, the hoopla generated by the non-availability of petroleum products have been rather unprecedented.

From players in the telecoms, publishing, banking, manufacturing, healthcare givers, transportation, aviation sector, other service providers, the pangs of fuel scarcity was painfully felt by all, with many people enduring unending long queues at petrol stations across the country.

Fuel scarcity brouhaha

The nation’s economy is almost totally reliant on crude revenue but has seen income dwindle since the middle of last year as world oil prices halved.

The Nation gathered that the current fuel scarcity comes as the result of dispute between government and fuel marketers and transporters over unpaid bills of $1 billion. Since October 2014 they were unpaid the difference between real cost of products and fuel price subsidised by outgoing Goodluck Jonathan’s government.

The Major Oil Marketers Association of Nigeria (MOMAN) disclosed that the scarcity of fuel currently being experienced in major cities across the country was as a result of the inability of the federal government to pay outstanding subsidy claims. MOMAN is responsible for the importation of about 60 percent of petroleum products consumed in the country.

The Executive Secretary of MOMAN, Olawore Obafemi, who disclosed this, attributed the current fuel scarcity to the non-payment of arrears of subsidy claims and rise in cost which has hindered the marketers from importing petrol into the country since February.

To economic analysts, a constellation of factors may have caused the recurrent fuel scarcity being experienced in the country.

One of those who shared this view and very strongly too, is Tonye Cole, Chief Executive, Sahara Group.

According to Cole, the current fuel crisis centred on the new change of government, prospects for removal of fuel subsidies and weakening naira.

Apparently frustrated with the lingering oil crisis in the country, hundreds of people marched round the streets to embark on a mass protest due to fuel scarcity and the power outage across the country.

Field day for black marketers

With petrol tanker drivers refusing to lift petrol from depots, the resulting chaos made nearly impossible to buy petrol from licensed filling stations across the country.

Thus, black market sellers sold jerry cans of fuel by the roadside at inflated prices from between N5, 000, N10, 000 for five and ten litres of petrol, sometimes offering a tainted or diluted product that destroyed engines.

Businesses worst hit by fuel scarcity

As Nigerians continued to suffer under the current acute fuel scarcity, telecommunication giants like Airtel, MTN and Etisalat were forced to shut down their operations in certain areas across the country.

MTN Nigerian notified its subscribers of a major disruption of its network if the situation continues unabated.

According to Akinwale Goodluck, the company’s corporate services executive, MTN’s reserves of diesel is running low and if the company is unable to receive additional supply of the product within the next 24 hours, customers may experience poor services.

The company further assured that it was doing its best to deliver uninterrupted service to its customers, it however apologised in advance for any outages or inconvenience that its customers may suffer.

Etisalat issued a statement, saying its services will be disrupted as a result of the continuous fuel scarcity been experienced in the country. The statement released last Monday notified its customers of a possible disruption of service, adding that management is working to ensure that the current problem is abated on time.

The statement further appealed to affected customers to bear with management of Etisalat over the development.

Relatively, in a text message to its customer, Airtel, another telecommunication network whose service is currently been affected by the fuel scarcity, appealed for understanding on the part of the customers, while assuring them that efforts are on to turn the situation around.

Commercial banks in the country also closed offices. The first to announce the development was Guaranty Trust Bank, GTB.

In its announcement, it said that its branches will close at 1pm beginning last Monday across the country until situation normalises.

Like GTB, Union Bank of Nigeria, Sterling Bank and several other banks closed early because of diesel shortages.

Domestic airlines Arik Air, Aero Contractors and Dana Air were hit by a lack of aviation fuel while international carriers diverted to other West African nations to pick up stocks.

Apart from big businesses, frozen food traders suffered major losses.

For instance, traders at the Ijora-Olopa area of Lagos last Wednesday said they lost various food items worth N10 million, following the lingering national energy crisis.

According to the traders, the persistent electricity outage in the frozen food market is worsened by the scarcity of petrol and diesel, needed to power their power generating plants.

Afusat Popoola, President of the Ajeromi Frozen Food Market Association, said that the lost food items included chicken, turkey, fish, shrimps, gizzard and prawns.

Popoola said that the traders were victims of the logjam between the federal government and the petroleum products marketers over outstanding subsidy payment.

She also said that her members were caught unawares because they never envisage that the nation was going to be thrown into a prolonged crisis.

“The traders were crying when we ordered them to surrender all the decayed food items for destruction last Tuesday.

“The market has a reputation for selling fresh frozen food and we cannot allow any trader to sell bad frozen food under our leadership.

“What we destroyed on Tuesday because of power outages and our inability to purchase petrol and diesel was worth more than N10 million.

“We are appealing to the Eko Electricity Distribution Company (EKEDC) to always consider the impact of outages on our business and the health of the general public.

“Our business depends on regular supply of electricity,” she said.

The market leader said that irregular power supply had forced many traders out of the frozen food business and also made many of them to be indebted to the banks.

Most companies rely on a steady supply of diesel to power generators given the massive shortage of public electricity in the country. Last week, the government said production was just 1,327 megawatts — a record low.

Miffed by the fuel scarcity, a faction of the Nigeria Labour Congress (NLC) led by Isa Aremu said that it would direct workers to stay at home if the current fuel scarcity across the country is not addressed.

Aremu, said in a statement made available to the News Agency of Nigeria in Kaduna that, “If the current scarcity and price robbery of Nigerians continue, NLC will have no choice but compel workers to stay at home.

“Workers certainly cannot fuel themselves to work with their blood. There is a limit to slavery and state marketers’ extortion.

“With an outgoing President and incoming one, five past heads of state alive, 36 state governors and hundreds of legislators and scores of ministers, no country on earth parades the highest number of state actors like Nigeria.

“Yet, there is no governance with respect to distribution of basic products like petroleum and kerosene.”

According to him, it is time Nigerians stopped agonising in the hands of cabals holding the nation to ransom for several weeks through deliberate deprivation of petroleum products.

Concerted effort to end fuel scarcity

As many people agonised over the losses caused by the recurrent fuel crisis, the Managing Director of Capital Oil and Gas, Ifeanyi Ubah in what many commentators described as a well-thought gesture issued a statement penultimate Sunday, saying that he was pulling out of the marketers strike due to the hardship it was causing Nigerians and had instructed his trucks to deliver around the country.

Ubah who made good on his promise to supply fuel around the country, also called on other marketers to follow suit and supply product to end the scarcity.

Interestingly, the end of the crisis was reached after the main unions and industrial groups responsible for supplying and distributing the majority of petrol and diesel in Nigeria met the government for talks.

Agreement was reached last Monday to end a crippling fuel crisis, which had left the country at a virtual standstill for days.

Way out of fuel crisis

In a statement issued on behalf of the Lagos Chamber of Commerce and Industry and made available to The Nation, Remi Bello, President of LCCI while lamenting that the country was in dire straits as a result of the fuel scarcity, assured with concerted efforts on the part of all and sundry, especially those saddled with the responsibility of managing the nation’s resources, all will be well in the country again.

Most economic and social activities, Bello noted, “have been paralysed with an imminent shut down of the entire economy. Yet there is no evidence of active engagement with stakeholders in the petroleum industry to bring an end to the crisis. The government needs to demonstrate accountability to the people.”

Peeved by the overt lack of concern by the outgoing government, the LCCI boss warned the country and the economy should not be allowed to continue to drift as if there no one in charge.

In the view of Bello, one better way to rescue the country from the current situation which has taken a toll on the citizens and the economy is to galvanise action aimed at addressing virtually all sectors.

The Lagos Chamber further urged the new administration to immediately deregulate the oil and gas downstream sector, in order to provide an enduring solution to the recurring problem of petroleum product scarcity, corruption inherent in the subsidy regime, the collapse of refineries, lack of investment in the downstream sector, loss of jobs etc.

Government, he said, “needs to get out of the way, so that the sector and the economy as a whole can make progress. “This will pave the way for the restoration of normalcy in the sector and attract private capital, boost investments and create jobs.”