To say that the consequences of the five-week scarcity of petroleum products, particularly premium motor spirit (PMS), has become dire for Nigerians is to state the obvious.
Long queues waste precious man hours at petrol stations. Corrupt deals at the stations exacerbate frustration. Fuel said to be unavailable is sold at exorbitant underground market price in jerry cans to those with money but no time to waste.
Instead of the regulated price of N87 per litre, fuel sells for between N120 and N140 at petrol station and between N150 and N250 in the underground market.
On May 4, 2015, finance Minister and Economy Co-ordinating Minister, Ngozi Okonjo-Iweala, announced the disagreement between the Major Oil Marketers Association of Nigeria (MOMAN) and the government.
MOMAN claimed Abuja owes it N200 billion in subsidy payment. Okonjo-Iweala claimed the figure is N131 billion. The N69 billion difference is the source of the sore dispute which holds the nation by the jugular.
MOMAN Executive Secretary, Obafemi Olawore, told journalists that its members would not resume fuel import without cash backing.
Since then, the only news about the attempt to resolve the dispute is total silence from the government while MOMAN sticks to its guns until the debit is paid in full.
It is shocking that a dispute over N69 billion cannot be resolved when the Petroleum Products Pricing Regulatiory Agency (PPPRA) specifies all the rates payable to MOMAN for the landing cost and other charges for imported petroleum products – if corruption is not involved.
Bank interest calculations and differentials on foreign exchange transactions by the marketers, which the government had promised to defray, do not require the precision of rocket science.
We do not understand – and refuse to buy into – any explanation which makes the dispute over payment of debt the source of the excruciating suffering Nigerians have endured for over five weeks.
Independent marketers are yet to be paid what the government owes them. It is unreasonable for Abuja to create the impression that it is suddenly managing finances
prudently by refusing to pay what it owes.
A government which borrowed N437 billion to help pay the April salaries of its employees, must, more responsibly, borrow to pay marketers to resume importing fuel while both parties chunk through the disputed sum.
Ordinarily, the Nigerian National Petroleum Corporation (NNPC) imports half the nation’s demand. In case of emergency, such as now, it is supposed to import all the national requirement. Yet Nigerians groan. Small businesses collapse.
Suspicion grows that the disputed debt figure is not the kernel of the scarcity and the hardship. The figure may have been doctored. All the parties – marketers, their bankers, government officials – want their cut before the handover on May 29.
The fraud may not add up to the scandalous N2.78 trillion subsidy of 2013. But it may be enough to raise the eyebrows of the incoming Muhammadu Buhari administration, knowing his zero tolerance for corruption, with red herring probes which would freeze funds.
Nigeria, the sixth largest crude oil exporter in the world is the only member of the Organisation of Petroleum Exporting Countries (OPEC) which imports refined fuel. Others – Saudi-Arabia, Libya, Iran, Kuwait, United Arab Emirate, Algeria, Qatar, Venezuela – are expanding refining capacity at home and offshore.
Nobody is taking responsibility for fuel scarcity, which happens again and again. We expect the Buhari government to scrap this subsidy fraud once and for all, to liberalise the downstream petroleum sector.
But the step is fraught with a political time-bomb which will converge labour leaders and civil society on the streets with protests once pump price rises. The protests in January 2012 when the Jonathan administration raised it from N65 to N140 per litre is another banana peel over which the new government may slip.
Subsidy on petrol taxes the poor to satisfy the rich. The average Nigerian relies on the more expensive, deregulated diesel to get around than subsidised petrol.
Local refineries must produce at maximum capacity of 445,000 barrels per day to minimise import and attenuate pump price. But their turn around maintenance (TAMs) are another drainpipe.
The failure of the government to stop pipeline vandalisation and oil theft diminishes the capacity of the 5,120-kilometre pipepline to transport products cheaply.
Instead of handing pipeline policing to state governments, the NNPC prefers militants, ethnic militias, et cetera; supplemented with high-cost tanker drivers who damage the roads and divert products to highest-paying independent marketers.
These are ancillary medium to long term recommendations to solve an immediate scarcity.
The new government should dialogue with labour leaders to arrive at price hikes which will benefit all in order to scrap subsidy.
This will facilitate supply to meet the average daily demand 40 million litres of petrol, 12 million litres of diesel, and 11 million litres of kerosene without disruption.
