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The Fuel Distribution Malaise

The long-awaited Petroleum Industry Bill (PIB) should be passed by the National Assembly this time. The Bill was, among other things, aimed at reforming the oil industry and removing operational and regulatory impediments capable of creating an atmosphere of limited transparency


The lingering fuel crisis, particularly the Premium Motor Spirit (PMS), that is beginning to take a permanent place in our national life must be given paramount attention. While the nation enjoyed reasonable stability in fuel supply under the Goodluck Jonathan administration, that reprieve was not without a cost. It was as a result of massive importation of refined petroleum by government to meet local demand in the absence of functional refineries.

However, towards the end of Jonathan’s tenure in May 2015, the nation witnessed sudden fuel scarcity that lingered for about two weeks and almost grounded the economy. Citing huge debt owed them by government, the marketers withdrew their services and insisted on full settlement of their outstanding bills before they could make further supplies. In the midst of the quagmire, the marketers raised another issue: government’s silence on fuel subsidy.

According to the marketers, the banks have decided to distance themselves from fuel importation and its accompanying fuel subsidy. The pressure on government to remove the fuel subsidy has continued to mount. President Muhammadu Buhari has been told that the present economic realities do not support the continued payment of fuel subsidy as it is alleged to be a major source of corruption in the oil industry.

The international community has maintained pressure on Buhari to discontinue with the vexatious fuel subsidy regime. At least, this will guarantee stability of supply and price of the commodity and save the economy the negative impact it has imposed on it.

A recent report by the National Bureau of Statistics (NBS) shows that Nigerian households paid as high as N155 per litre for petrol between June 2014 and June 2015. The report titled, “Premium Motor Spirit (Petrol) Price Watch June 2015”, shows average monthly prices actually paid by households for PMS across the 36 states and FCT during the period.

The NBS also reported in its Consumer Price Index (CPI) that the inflation increase of 9.2 per cent for the month of June was linked to PMS supply. According to the report, “Irregularity of the supply of Premium Motor Spirit (PMS) continues to impact food prices. The Food Sub-index rose by 10.0 percent (year-onyear) in June, up by 0.2 percentage points from 9.8 percent in May. The faster pace of the Headline Index could be linked to the irregularity in the supply of Premium Motors Spirit (PMS), popularly referred to as Petrol, during the period under review.”

Regularising the epileptic petrol supply was a major promise of the ruling All Progressives Congress (APC) during the election campaign and Nigerians had banked on that promise. Contrary to expectations, the irregular petrol supply has continued to bite the economy and threaten the people’s means of livelihood. Worse still, the Buhari-led government has continued to maintain an ambivalent posture on the matter. Recently he explained that he was yet to make any pronouncement on the proposal to remove subsidies in prices of petroleum products as he was still carefully reviewing the proposals because of its sensitive nature.

Watching his body language, it is unlikely that the President is inclined to removal of the petroleum subsidy. This poses a dilemma as to how to reduce the huge amount spent in importing refined petroleum product, which has become inevitable even if we fix the refineries as soon as we are being made to believe. “I have received many literature on the need to remove subsidies, but much of it has no depth. When you touch the price of petroleum products, that has the effect of triggering price rises on transportation, food and rents. That is for those who earn salaries, but there are many who are jobless and will be affected by it.”

Government must take concrete steps to stem the biting effects of irregular fuel supply across the country with a view to achieving optimal stability without further delay. As already explained, the epileptic supply of petroleum products is having its toll on the economy. It also gives room for corruption as many of those involved in the business appear to be taking undue advantage of the situation to make illegal profits.

For instance, some petroleum product marketers are suspected to be engaged in illegal cargo transfer deals involving diversion of supplies bought by the major oil marketers to their independent marketer counterparts. As a result, the independent marketers hardly sell at official price while they enjoy more regular supply both in the urban and rural areas.

It is noteworthy that government has commenced moves towards overhauling the oil industry, including the holding company, the Nigerian National Petroleum Corporation (NNPC). The corporation has been at the receiving end of sustained allegation of corruption and resource mismanagement levelled against its operations over the years. This should be carried out in the best interest of the country without essentially taking a course of witch-hunting or persecution of those who are not in the good books of government. The long-awaited Petroleum Industry Bill (PIB) should be passed by the National Assembly this time. The Bill was, among other things, aimed at reforming the oil industry and removing operational and regulatory impediments capable of creating an atmosphere of limited transparency in the running management of our oil resources. Efforts should also be stepped up in fixing the local refineries as a way of mitigating the pains of fuel scarcity across the country.

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