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Nigerian Fuel Scarcity: Marketers Demand Action from President Tinubu

In recent weeks, Nigeria has been hit hard by a widespread petrol shortage that has left many motorists waiting in long queues and facing skyrocketing fuel prices. As frustrations mount, independent marketers are now calling on President Bola Tinubu to take decisive action against what they describe as unfair practices by the Nigerian National Petroleum Company Limited (NNPCL), the Depots and Petroleum Products Marketers Association of Nigeria (DAPPMA), and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

A Crisis Deepens

The current fuel scarcity in Nigeria has created a perfect storm of problems. Petrol stations across the country are struggling to keep up with demand, leading to empty tanks and increasing costs at the pump. This shortage has sparked outrage among the public, who are demanding a reduction in prices and more transparency in the fuel distribution process.

Allegations of Mismanagement

Marketers who spoke anonymously have pointed fingers at several key players in the fuel supply chain. According to these sources, the situation has been exacerbated by questionable dealings between the NNPCL, tank farm owners, and the NMDPRA. These issues have led to a severe imbalance in the supply chain, resulting in high prices and poor availability of fuel.

The NNPCL, which is the only entity allowed to import fuel into Nigeria, has been accused of exacerbating the situation by creating a bottleneck that benefits certain parties. The marketers argue that the current system unfairly favors tank farm owners, who are charging exorbitant prices to retailers.

Pricing Discrepancies

A closer look at the pricing reveals a significant discrepancy that is contributing to the problem. The NNPCL sells Premium Motor Spirit (PMS) to private depot owners at an ex-depot price of N556.5 per litre. However, these depot owners then sell the petrol to marketers at prices ranging from N700 to N740 per litre. This markup leaves marketers with minimal margins, making it difficult for them to sell the fuel at competitive prices at the retail level.

This pricing gap has a ripple effect throughout the supply chain. The inflated costs passed on by depot owners are ultimately shouldered by consumers, leading to higher prices at the pump and increased frustration among the public.

Calls for Regulatory Reform

Industry insiders are calling for immediate reforms to address these issues. Historically, the NNPCL would provide fuel allocations to tank farm owners with a regulated benchmark price, ensuring that marketers received a fair deal. However, this system has reportedly been dismantled, leaving marketers vulnerable to the unchecked pricing practices of depot owners.

“The current system is broken,” said one marketer who wished to remain anonymous. “We used to have a benchmark price that ensured fairness, but now we are at the mercy of the tank farm owners. They are charging us excessively, and we are forced to pass those costs on to consumers.”

Marketers are urging President Tinubu to step in and enforce stricter regulations to stabilize the market. They believe that government intervention is necessary to restore balance and ensure that the distribution chain operates fairly and transparently.

The Role of Local Refineries

In addition to regulatory reforms, there is a growing call for increased support for local refining capacity as a long-term solution to Nigeria’s fuel supply issues. The Dangote Refinery, set to become one of the largest in Africa, is seen as a key player in addressing the country’s fuel shortages. By increasing local refining capacity, Nigeria could reduce its dependence on imported fuel and alleviate some of the current supply problems.

There is also a push to revive Nigeria’s four state-owned refineries, which have struggled with operational challenges in recent years. Investing in these refineries could help improve domestic fuel production and reduce the need for imports.

“Revitalizing our refineries is crucial,” said an industry expert. “We cannot continue to rely on imports while our domestic refining capacity remains underutilized. By investing in these facilities, we can address the current shortages, create jobs, and support economic growth.”

Government’s Response

The Nigerian government has faced mounting pressure from the public and industry stakeholders to address the fuel scarcity crisis. President Tinubu has acknowledged the severity of the situation and has promised to take action. However, the effectiveness of these measures will be closely scrutinized.

In the short term, addressing the issues with the NNPCL, DAPPMA, and NMDPRA is essential for stabilizing the fuel supply and pricing. The government’s ability to enforce regulatory reforms and ensure transparency in the distribution chain will be key to resolving the current crisis.

Looking Ahead

As Nigeria navigates this challenging period, the focus will likely remain on improving both the regulatory environment and the country’s refining capabilities. Ensuring that the fuel distribution system operates fairly and efficiently will be critical for achieving long-term stability and growth.

The next steps will be crucial in determining whether Nigeria can overcome its current fuel supply challenges. The government’s actions in the coming weeks and months will be vital in restoring confidence in the fuel supply system and ensuring that all Nigerians have access to affordable and reliable fuel.

In conclusion, the ongoing fuel scarcity in Nigeria has highlighted significant issues within the oil and gas sector. The calls for President Tinubu’s intervention reflect a broader desire for reform and greater transparency. As the country moves forward, addressing these concerns and investing in local refining capacity will be essential for resolving the crisis and building a more resilient fuel supply system.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

6th August, 2024

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