Fuel scarcity in festive seasons – Thisday

The downstream sector of the petroleum industry should be managed transparently

Less than two weeks to Christmas, there seems to be no solution in sight to the problem of long queues which recently returned to fuel stations across the country. This is despite the recent presidential directive to the Ministry of Petroleum and the Nigerian National Petroleum Corporation (NNPC) to arrest the situation. But it is obvious that the timing of this scarcity was designed by the perpetrators to maximise their illicit gains since it is a well-known fact that the Christmas and New Year season always witness major movement of people, goods and services.

We note particularly that the independent marketers association had earlier threatened to withdraw their services due to alleged breach of bulk purchase agreement with NNPC. The group had accused the corporation of selling fuel to it above the bulk price of N133.28k per litre, an allegation the NNPC denied. Whatever may be the reason for the scarcity, the agony of people having to spend hours at fuel stations can only be imagined, especially at this most critical period of the year.

The question that arises out of the current situation is whether Nigerians would ever see an end to the perennial scarcity that has come to define the management of the downstream sector of the petroleum industry. It is an issue that should worry the current administration, especially since there seems to be no coherent policy in place to deal with the issue in a holistic and lasting manner.

Going forward, there are a number of things that would need to be done, beginning with selling off the ill-maintained refineries that have become huge drain on scarce resources. Over the years, these refineries have continued to fail in terms of satisfying the essence of their establishment, given that the importation of petroleum products has become a major and running routine in the economic management of the country. The reason, as often adduced by the industry experts, is that the refineries have either all broken down due to poor maintenance culture or that the installed production capacity cannot meet the ever-growing local demand for petroleum products.

While it makes no sense that Nigeria continues to import finished petroleum products at huge cost to the economy, experience has also shown that the government is not adept in the efficient management of businesses. If anything, the tales of corruption, ineptitude, sabotage and other sharp practices in the oil and gas industry have continued to confirm this widely held opinion. That is why we believe that the proposed idea of spending hundreds of billions of naira on the turn around maintenance (TAM) of these moribund refineries is tantamount to throwing scarce resources down the drain.

What President Muhammadu Buhari and his administration must therefore realise is that as long as the subsidy remains, the incentive for private and public actors to game the system will continue to be there. Also, as long as there is default in subsidy payment, which is not inconceivable given the current state of our finances, supply will be constrained, which necessarily pushes pump price many times above the market price, with serious impact on cost and volume of production in the economy and untold hardship on the populace, especially the poor.

Whatever may be the challenges, it is our considered view that something has to be done to end the fuel scarcity, especially as we move towards the Christmas and new year holiday season. But as a permanent solution, the federal government must muster the requisite courage to overhaul the downstream sector of the petroleum industry which goes beyond periodic hikes in the pump price of PMS. The sector has to be more accountable, transparent and efficient.

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