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Fuel punishment for Nigerians at Christmas

By Luke Onyekakeyah
11 December 2018   |   3:50 am
The threat last week by oil marketers to shut down depots nationwide over unpaid subsidy debts shows that except something is done urgently to settle this matter; the usual fuel scarcity that defines Nigeria could resurface any moment across the country even as people are preparing for Christmas and New Year festivities. The question is…


The threat last week by oil marketers to shut down depots nationwide over unpaid subsidy debts shows that except something is done urgently to settle this matter; the usual fuel scarcity that defines Nigeria could resurface any moment across the country even as people are preparing for Christmas and New Year festivities.

The question is why must there be fuel scarcity during every Christmas and New Year celebrations? Why must the issue of subsidy payment arise at this time?

There is reason to believe that the recurrent fuel scarcity, especially at Christmas, is stage managed by some unscrupulous elements to achieve some selfish reasons. But that is unfair to the suffering Nigerians.

Yesterday (Sunday, December 9), the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), one of the groups issuing the threat, reportedly, directed its members to shut down operations from midnight until the Federal Government pays all outstanding debts put at N800 billion. The other group is Independent Petroleum Products Importers (IPPI).

Luckily, the Major Oil Marketers Association of Nigeria (MOMAN), National Union of Petroleum and Natural Gas Workers (NUPENG), PENGASSAN, Petroleum Tanker Drivers (PTD), among others (there are many of them feasting on Nigeria’s oil), are not part of the threat, meaning that government could settle the matter quickly if it so determines.

DAPPMAN’s directive came barely 24 hours after the Federal Government announced that it would pay N236 billion to the marketers latest by Friday this week as first tranche of the outstanding subsidy claims.

At this juncture, it is imperative that well meaning Nigerians should intervene. They should prevail on the aggrieved marketers not to proceed on the strike to save weary and famished Nigerians from avoidable suffering and pain this Christmas.

There is no doubt that the marketers are making genuine claims, which government ought to have settled since December 2017, when the association suspended its strike.

Government should, therefore, endavour to pay a genuine debt it owes in the interest of national industrial harmony, peace and stability in the country.

It is heartening that up till now, there are no reports of scarcity or fuel queues anywhere in Nigeria. The petrol stations are selling normally.

There are no fuel queues and hopefully such would not surface, as government strives to nip this monster in the bud.

Otherwise, to have fuel scarcity at this critical time, when the general elections are at hand would be damaging.

There would be confusion and serious disruption in the logistics of the elections and that could prepare the ground for anarchy, the end of which is better imagined.

It would be interpreted in some quarters as a rigging strategy. The best thing, therefore, is to avoid it.

Usually, when there is fuel scarcity, there would be blame game flying around.

While some would blame government for having plans to hike fuel price as the cause, others would blame the NNPC for undersupplying to the depots.

The failure of the country to fashion out a workable and sustainable framework for local fuel production rather than importation is at the root of the problem. It is a systemic failure of unimaginable proportion.

For me, the blame game is meaningless. The reason why the issue of subsidy payment comes up every now and then, especially, during Christmas is because Nigeria is not producing petrol that can service domestic need.

At the moment, virtually everything is imported. The three refineries in the country are ill maintained. The solution is to build modern refineries to produce fuel locally and stop importation.

Around the world, how do businessmen deal with a scarce commodity? Fuel is a scarce commodity in Nigeria and those that can import it have the upper hand.

Once there is scarcity of the product, desperate motorists and citizens who need fuel for their cars and generators would besiege the few filling stations selling the product.

Greedy black marketers will capitalise on the situation to hike prices.

A liter of petrol sold for N145 could jump to N250. The black marketers will reap huge profit, which is their usual Christmas and New Year windfall.

The mismanagement of the oil sector is the undoing of Nigeria. The Buhari administration inherited it but has not addressed it.

Not until there are functional refineries that would put a stop to fuel importation, subsidy will continue to be there, irrespective of who is in power.

All hope is now placed on the Dangote mega refinery at Lekki in Lagos under construction, which is billed to start production in 2019. Nigerians will have a new lease of life once the Dangote refinery kicks off production.

Before now, Nigeria had four refineries owned by the Nigerian National Petroleum Corporation (NNPC), located in Port Harcourt, Warri and Kaduna but there are now three.

The two refineries in Port Harcourt built in 1965 and 1989 were merged into one in 1993, with a total refining capacity of 10.500 million metric tonnes per year. The Warri refinery was built in 1978 with a refining capacity of 5.5 million mt/yr.

The Kaduna refinery was built in 1980 with a refining capacity of 5.5 million mt/yr.

The three refineries have a combined refining capacity of 445,000 barrels per day (b/d), which amounts to 70.75 million liters of petrol.

The daily demand of petrol in Nigeria is about 40.32 million liters, meaning we ought to have an excess 30.43 million litres if the three refineries were working at full capacity.

Unfortunately, the refineries are producing at far below their installed capacity to the extent that they are not even meeting the meager 40.32 million liters needed daily in Nigeria.

Following years of low performance and high Turnaround Maintenance (TAM) cost, the Federal Government, wrongly, decided to hands off the building and running of new refineries and instead allowed private investors to take over.

As for the existing refineries, the immediate past Jonathan administration offered an equity share of 51 per cent to the oil industry unions to assuage them.

The aim was to privatise the refineries, which the unions vehemently opposed. That left the country in quandary.

The refineries are not functional in government hand and at the same time not privatised. It is a self-inflicted pain that Nigerians are living with.

If the truth must be told, despite being a major oil producing and exporting country, Nigeria has not made appreciable investment on refineries. No amount of turnaround maintenance will change the technology of the refineries.

Second, the total refining capacity of all the three refineries in Nigeria at full capacity is a meagre 445,000 barrels per day.

The world’s largest refinery, Jamnagar Refinery in Gujarat, India, produces 1, 240,000 barrels per day. Paraguana Refinery Complex in Falcon, Venezuela, produces 940,000 barrels per day.

And GS Caltex Yeosu Refinery in Yeosu, South Korea, produces 730,000 barrels per day. Egypt has nine refineries with a combined output of 732,550 barrels per day.

The tenth refinery is under construction. South Africa has six refineries with combined out of 626,000 barrels per day.

These examples show why fuel scarcity will not end in Nigeria until modern refineries are built by government of private concerns. Government should save Nigerians this pain this Christmas.