Vanguard (Lagos)

4 March 2014

Nigeria: Why Fuel Scarcity Persists - Marketers

Lagos — As the fuel scarcity enters the fourth day, with commuters and motorists in Lagos and its environs subjected to severe hardship, marketers, yesterday, denied hoarding the product. They, however, blamed the current scarcity on the delay in the release of the first quarter import allocations.

The marketers said: "We cannot hoard what we don't have, government should avoid fire brigade approach to importation of petroleum products since we do not refine petrol in Nigeria."

Another marketer attributed the unofficial price hike to increase in the ex-depot price from N91.50 kobo to N95 per litre. Added to other ancillary costs, he said that pump price is now between N100 and N105 per litre. "For instance, the union fees, which was 30 kobo, now hovers around 50 kobo. The transport cost has also increased", he said.

However, the current situation is beyond the monitoring of outlets, as according to the marketers, "Federal Government could have avoided this current scarcity if they really wanted to."

Those who spoke with Vanguard in confidence recalled that marketers have been raising alarm of the impeding scarcity since the delay in the release of the Q4 allocations last year as well as the non-payment of outstanding subsidy claims, which are now in arrears for two quarters.

They noted: "If there is no allocation, you cannot go to the DPR to get import licence. Without the import licence, you cannot open a Form M. Without the Form M, you cannot approach the banks to open Letters of Credit, LC, for you to import. Without the LC, there is no dollar to buy the product and what you have left are empty depots and empty filling stations."

Beyond the release of the quarterly allocations by the PPPRA, there are also the outstanding issues of reimbursement through subsidy claims as well as accruing banks' interest charges, which are unresolved.

Added to these, is the non-approval of the 2014 national budget, which according to the marketers, is a drawback for all businesses, as expenditure for each sector of the economy is derived from the budgetary allocations.

"This is March, and the budget is not yet approved; of course, this will affect every other projection for the year," an independent depot operator said.

Oil marketers are of the opinion that the only way to close the supply gap is to increase allocations for Q2, in view of the shortfall in Q1, while also resolving all outstanding issues with regard to subsidy payments and banks' interest charges.

NNPC injects 50m litres of petrol into market

Meanwhile, as the scarcity lingered, the Nigerian National Petroleum Corporation, NNPC, announced, yesterday, that it has injected additional 50 million litres of premium motor spirit, PMS or petrol into the market.

Nigeria's daily national demand hovers between 30 million and 35 million litres depending on the season.

With the new 50 million litres, major marketers are optimistic that the scarcity will begin to ease from Thursday, when marketers' product vessels are expected to start arriving.

Confirming the release of the 50 million litres from NNPC, the Executive Secretary, Major Oil Marketers Association of Nigeria, MOMAN, Mr. Obafemi Olawore, in a telephone chat with Vanguard, yesterday, disclosed that of the 50 million, the majors had received 30 million litres, and were expecting the balance of 20 million litres before the close of work today.

Meanwhile, the NNPC in a statement, yesterday, said it has supplied additional volume of 33 million litres of petrol to MOMAN for onward distribution to fuel stations across the metropolis and beyond.

But Olawore said the actual quantity is 50 million litres, "which is being shared among the six majors - Total, Oando, Forte Oil, Mobil, Conoil, and MRS. But currently on ground is 30 million litres and we are expecting the balance of 20 million litres this evening or tomorrow (today)."

NNPC's Acting Group General Manager, Group Public Affairs Division of the Corporation, Dr. Omar Farouk Ibrahim, said in a statement that an extra volume of 25, 000 metric tonnes of fuel, the equivalent of 33 million litres of petrol was supplied to the marketers.

He said this was part of measures by the Corporation to end the artificially induced scarcity.

He added, "while we intensify our ongoing direct monitoring of fuel stations across Lagos and its environs, we are providing the extra volume of product to eliminate the noticeable queues arising from the induced scarcity."

Filling stations remain dry

Notwithstanding the NNPC's largesse, many petrol stations remained closed at press time, thus leaving motorists and commuters stranded and confused.

The few outlets that were open sold their products far above the pump price. Prices ranged from N100 to N150 per litre, depending on the outlet, while black market hawkers had a field day, as half-filled 10-litre jerry cans sold for between N1,500 and N2000.

Out of the six outlets visited from the Berger Bus Stop up to the Toll Gate, at the Lagos end of the Lagos-Ibadan Expressway, none was open. But vehicles queued up in anticipation that they would get petrol.

At the Techno Oil station, Ojodu-Berger, petrol was sold for N120 for a litre, while its Oando counterpart sold for N125. From Abule Egba to the Airport Bus Stop along the Oshodi-Abeokuta Expressway, only the NNPC outlet had petrol, thus causing a huge traffic grid lock, on an already heavy traffic area. From the Oshodi end of the Oshodi/Apapa Expressway, the story was the same, as none of the outlets was seen dispensing petrol.

Along the LASU-Iyana-Ipaja Road, only few independent outlets including Energy, Swift Oil, Capital oil and Adebass Petroleum sold petrol to the public, while majority of the stations on this axis had run out of stock.

Vanguard findings showed that all the oil depots in Kirikiri had depleted their stock due to the late release of fuel allocation in the first quarter of 2014, by the Petroleum Products Price Regulatory Agency, PPPRA.

Commuters pay the price

Commuters, as expected, bore the brunt of the scarcity as well as the sudden unofficial petrol price hike, with attendant sharp increases in the cost of transportation. Fares from Berger to Mile 2, shot up to N400 from N300, while from Berger to Oshodi increased to N250 from the usual fare of N150. Also, commuters from Oshodi to Mile 2 were charged N200 against previous N100.

A visibly angry motorist, who identified himself simply as, Wale, blamed government for the current scarcity. "This is just an indication that the government is insensitive to the people who voted them into power.

"I have been here since morning in search of where to get fuel but most of the filling stations along this road have stopped selling. Government should please act fast because not all of us can afford to buy from black market," he said.

Early reprieve

The NNPC had initially anticipated an early reprieve from the scarcity, based on suspicions that marketers were hoarding the product.

Accordingly, the Corporation had promised to arrest the situation in conjunction with the PPPRA, by commencing detailed monitoring of fuel stations in Lagos and environs.

Why scarcity may linger

Apart from the delay in the payment of arrears for subsidy claims and delay in the release of import allocations, the current scarcity may linger longer than anticipated for a number of reasons.

First, marketers noted that it takes about two weeks from the placement of order with an oil trader or refinery to the arrival of the vessels at the depots.

However, this cycle may be reduced if there are vessels waiting at sea, then the turnaround time may be reduced, but the process remains basically the same. This is because, even while the vessel is hovering at sea, it will still require placing a formal order with the owners in Europe, mostly, Rotterdam.

However, the majors are optimistic that the current scarcity may not last beyond this week, as some of their members had already placed orders as soon as the allocations were released.

Accordingly, Conoil is said to have brought in 20 million litres and expecting another cargo of 18million litres. Similarly, Mobil Oil is expecting a vessel with five million litres by tomorrow, and a second vessel with nine million litres before the week ends.

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