NNPC’S Reduction In Supply of PMS Responsible for Resurfacing of fuel scarcity


The reduction in the supply of Premium Motor Spirit PMS) or Petrol by the Nigerian Nation Petroleum Company ( NNPC)  is alleged to be responsible for the current fuel scarcity that has resurfaced in Lagos and other parts of the country.

Industry sources said, Perhaps part of the reasons why NNPC is reducing the volume is because there is no reflective price for the commodity in the country.

The product is sold in US dollars. The exchange rate is over N500 to $1.  The landing cost according to industry operators should between N250 to N300 but the government has forced NNPC to retail the product at a ridiculous price of N165 per litre.

Some industry observers told Business Standards that NNPC in an attempt to truly ascertain the actual volume of PMS consumed in the country because NNPC does not believe that Nigeria consumes as much as 90 million litres of PMS a day. Because of this, it decided to cut the volume to between 70 to 80 million litres per day.

 The price of diesel is also is said to be responsible for the scarcity as It cost N1.2 and N1.5million for per truck to move the product to their various destination.

But an official of NNPC told Business Standards that the Pipeline and Products Marketing Company PPMC) is not cutting down supply but provides normal volume.

 The organization, it was learnt was advised by some stakeholders not reduce the volume of petrol it is supplying because it would lead to scarcity but NNPC refused.

However, it has been observed that the shipping position of the Nigeria Port Authority which normally highlights the number of vessels laden with petroleum products brought into the country, have been reporting fewer number of vessels  in the past few weeks.

The stakeholders agreed that the country cannot be consuming 90 million litres of petrol per day but agreed that what is consumed is between 50 million to 65 million litres while the remaining volume of 30 million may have been smuggled out of the country.

An attempt to speak with NNPC spokesperson, Garbadeen Muhammed,  was not successful as he did not  pick his  calls

Fuel scarcity returned to Lagos, Nigeria’s economic capital as more filling stations closed their shops to motorists on Sunday.

Nigeria is Africa’s largest oil producer that exports crude oil and depends exclusively on imported petroleum products to oil her economy.

The few that sold petrol across the metropolis had long queues at their pumps. Early signs of the commodity’s scarcity surfaced in Lagos on Wednesday, following weeks of scarcity in Abuja, the nation’s political capital.

Checks by themorningstar.com.ng across the metropolis showed the few stations that sold fuel restricted the sale of the commodity to two or three pumps in their respective outlets.

The intensity of the scarcity may worsen today (Monday) if the situation does not improve by midnight.

A tour of the metropolis showed that between Ojota and Ikorodu, stations owned by major marketers were shut while a few of those owned by independent marketers were dispensing fuel, though slightly above the N165 per liter regulated pump price.  This slight increase has not however been reflected officially on their pumps. Also, check at filling stations along Ayobo Ipaja road that boasts of no fewer than six to eight filling stations had one or two open to dispense fuel to customers.

It was also discovered that most of the filling stations that closed their gates to motorists took the action as a way of hoarding the commodity based on the speculation of a possible price hike. The Morningstar.com.ng gathered that it has been challenging for retail outlets getting petrol because of the issue of pricing.

A station manager of an NNPC retail filling station on the outskirts of Lagos who pleaded anonymity explained that for a few days now, his trucks have been finding it difficult to load the product in Lagos.

He blamed the cause of the scarcity on the high cost of diesel used for freighting petrol from depots across the country and also used for running generators to power the filling stations in the absence of electricity.

“We had little difficulty loading petrol for some days. The depots are keen to increase the price of the commodity owing to some factors, but there is a strong resistance from the government. I am aware that critical stakeholders are working round the clock to ensure that no increase or scarcity happens. You know the government would not want to do anything that will cause dislocation in the country especially now that elections are building up,” the source said.

The National Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi, blamed the scarcity on the refusal of the Nigeria National Petroleum Corporation (NNPC) to supply petrol to his members. He said while his members are very active in loading and supplying of the products across the regions, they can only supply what is available.

“I can tell you that why the public is just now beginning to notice the scarcity is because Marketers have been loading from the stock they had. But when you load and supply and there is no replacement of the stock, it will eventually finish. This is what is happening.  For over one week, NNPC has not been supplying fuel, yet NNPC is the sole importer of the commodity. So when we don’t get supply, what do we load? The situation will be worse if nothing is done urgently and when the old reserve we have runs out,”Osatuyi explained.

Asked if the scarcity has a relationship with the agitation for price hike, he said: “I am not the government so I can’t answer this. Only the government can determine this,” he submitted.

Attempts to speak with NNPC spokesman, Garba Deen Muhammad yielded no result as his mobile number was “switched off”.

The Federal Government is banking on Dangote refinery to stop the forex hemorrhage  that goes through fuel importation.

With four state-run refineries (one has been sold to Indorama) with a combined capacity to process 445,000 barrels of oil per day, the country has consistently depended on imported fuel.

Stakeholders have also clamour for total deregulation of the downstream oil sector, but this has been resisted by labour and other civil society organisations.

They argue, and rightly so, that a fully deregulated petrol pump price will see the product selling for as high as N250 per litre because there will no longer be a subsidy. With petrol as the common denominator for everything in the country, especially now that inflation has jumped to as high as 17.71 percent, the government fear a possible backlash from taking such a suicidal economic decision.

The other fuels, diesel, aviation fuel and kerosene were deregulated by the regime of former President Olusegun Obasanjo. The prices of these fuels have gone so high that the economy might just be shut down.

olusola  Bello

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