The best that could be said of the latest hiccups in the fuel supply chain is that it is predictable. Rooted in the topsy-turvy dynamics of energy price movements which the Federal Government has not only proven to be most unimaginative in its response but utterly lacking in the will to provide the required firm and decisive leadership, it is unfortunate that Nigerians are again sucked into a most fruitless debate on superficialities when the way forward is so obvious.
The background to the latest conundrum is the current wave which has seen crude oil prices rise steadily across the globe. Once again, Nigerians – as it’s always the case during every successive cycle of high oil prices – are not only reminded of that sustainable path not taken by successive administrations to address the nation’s energy needs, but the cost of that dereliction. By this we refer to the wages of denial, of indifference by successive administrations and their penchant to kick the problem down the road – all of which have brought us to the sorry pass.
Few weeks back, the media had speculated on the imminence of fuel shortages and with it potential price hikes related to the surge in oil prices. From the national oil corporation came the denial that any such development was in the offing, with the usual assurance that the country had sufficient stock to meet the immediate and perhaps future needs of Nigerians. The story was the same right up to the time that fuel queues surfaced in Abuja, the seat of the Federal Government, until it spread to other parts of the country. Since then, other stakeholders have weighed in. For the Major Oil Marketers of Nigeria (MOMAN): “the current supply framework cannot guarantee steady and consistent supplies to the country, given the current state of government finances and unpredictable international supply shortages.” It therefore canvassed for “full deregulation of the petroleum downstream sector and full implementation of the Petroleum Industry Act (PIA) 2021”.
As for the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), the underlying issue is ‘bridging funds’. Aside the cost of diesel which has hit the roof, those in the fuel haulage business argue that the monetary augmentation paid to them to move products to different parts of the country has become inadequate, particularly as the cost of the product itself has quadrupled.
Like the N6 trillion subsidy bill under whose weight the economy currently chaffs, the so-called bridging fund, and both of which lie at the heart of the latest hiccup, are merely the symptoms of a deep-layered problem created by successive administrations. In other words, the issues are inextricably interwoven: Nigeria pays premium for fuel because its four refineries are not working; for its reliance on imported fuel, it has to put up with exchange rate differentials, the cost of lightering and associated handling charges, at the end of which the burden of cost-price differentials are said to be unsustainable. And as if that is not enough; the products pipeline network on which the nation had invested billions of taxpayers’ money to service the different parts of the federation has been left to corrode and so abandoned. Now, the country is forced to pay billions to a cartel of transporters to maintain the so-called price parity. It doesn’t even end there as OPECs sixth producer currently spends some 40 percent of its entire foreign exchange earnings on fuel imports alone.
Removing the subsidy, though ineluctable, would seem a minor part of the solution. In any case, it is hard to see government contemplating that in the current environment of acute inflation, unprecedented unemployment and pervasive poverty. At issue is what the government does to make the industry whole again and to give the economy the much needed breather. Nigerians surely have the understanding that the current regime of subsidy is unsustainable; what they reject is the thoughtless haste to remove it before a proper groundwork for a truly liberalised sector is laid. And just like the coming of Dangote Refinery will mark a new beginning, a more aggressive push to get other licensed players on board will certainly be a good step forward.
