Again, The December Fuel Scarcity Scare

Vehicles queue to purchase petrol during scarcity

Report of a looming fuel scarcity again at this time of the year has come as a bad omen to many Nigerians, given the significance of this period in the life of the nation.

The threat by oil marketers under the aegis of the Depot and Petroleum Products Marketers Association (DAPPMA) and the Independent Petroleum Products Importers (IPPI), to shut down depots nationwide, has sent shivers down the spine of many potential travellers in this season.

That is why the Federal Government needs to take the threat seriously to avoid any unpleasant consequences on the average Nigerian who is already devastated by the downturns in the economy in the past few years.

The immediate grouse of the oil marketers is their claim of unpaid outstanding N800 billion subsidy debts owed them by government and in this regard, has given a seven-day ultimatum, since November 28, 2018, for government to address the issue or face a looming fuel crisis.

According to them, the only way to salvage the situation is for government to pay the oil marketers the outstanding debts through cash option instead of promissory note being proposed.

The ultimatum which was served the Debt Management Office, DMO, the Minister of Finance, Chairman, Senate Committee on Petroleum Downstream, Department of State Services, DSS and the Minister of State for Petroleum Resources has already expired but the likelihood of a resurgence are not farfetched.

In specific terms, the marketers want the DMO to process and pay them in cash for their outstanding foreign exchange differentials and interest component claims together with the amount already approved by the Federal Executive Council (FEC) and the National Assembly.

This, according to them, is because they are not in a position to discount payment on the subsidy-induced debt owed as proposed by the DMO since the expected payment is made up of bank loans, outstanding administration charges due the Petroleum Products Pricing Regulatory Agency (PPPRA), outstanding bridging fund due Petroleum Equalisation Fund (PEF) and in some cases, AMCON judgment debts.

In a move that tends to dismiss the threats of the marketers, the Nigerian National Petroleum Corporation (NNPC) has assuaged the fears of the populace and assured that there’s no cause for worries, that it has a robust fuel stock and high sufficiency level.

It went further to state that the corporation was engaging the various stakeholders in the sector to address the issues in contention.

The issues concerning fuel subsidies in Nigeria have been in the public domain for quite a while particularly with the fluctuating price of crude oil in the international market and the non-functioning of the nation’s refineries over the years, which precede the current administration.

The Buhari government curiously raised the stakes by giving Nigerians a glimmer of hope when it came into power in 2015, in addressing this vexatious subsidy issue.

The nation was even told that there was no fuel subsidy anymore until facts began to emerge that the NNPC was managing the subsidy in its own way.

However, with the passing of about three and half years since he came into power, this hope appears to have been dashed.

In the course of the 2015 election campaign, the then opposition claimed that subsidy itself was a fraud and that they would “fix” the refineries in a space of six months.

Given its perception of the fraudulent nature of fuel subsidies, it did not make provisions for it in the four federal budgets it has proposed since 2016.

The Buhari administration, in summary, came into power on the promise of making the oil industry more transparent.

It was on the alleged corruption in the sector pre-2015, that the Jonathan administration was “taken to the cleaners” and severely criticised with the Save Nigeria Group among other notable civil society organisations.

At that time, crude oil price was being sold above $100 per barrel and the attempt by government to hike the price of refined premium motor spirit PMS to about N150 per litre was stiffly resisted by these civil society groups.

All hell was let loose and in making a concession, the Jonathan administration reduced the price per litre to N87 and some measure of public acceptance was procured.

Now, with crude oil price at about $60 per barrel, far less than the over $100 per barrel that prevailed in the previous administration, one thus expects that if there was a subsidy then, there would be less subsidy now.

This is strengthened by the fact that the Buhari government jerked up the price of PMS from the N87 per litre it met in 2015, to the current N145 per litre.

So why has the current administration not resolved this issue to date? It is therefore difficult to believe that the subsidy question is still lingering with this low price of crude and the higher price of PMS.

To make matters worse, the government has been paying for “subsidies” through the NNPC and not through the national budget.

This is indeed strange in this regime’s public finance. This appears to be a breach of the law of public funds appropriation.

There is thus the suspected sleaze going on in the NNPC through this subsidy issue, particularly with provision for domestic fuel demand reportedly increased.

With this, over N1.4 trillion is reportedly paid as subsidy by a government that campaigned on the premise that subsidy is a fraud.

There are indeed more questions than answers on this issue.

If the Minister of State on Petroleum Resources had at a time said that the landing cost of PMS was about N171 per litre, when crude oil was selling for less than $60 then this runs contrary to the earlier claims of this same group of those currently in power, that there was no subsidy when crude oil prices were high. Government has a lot of explaining to do on this recurrent and vexatious issue.

In charting a way forward for the nation on this issue, it is proper to ask why the civil society groups have suddenly kept quiet on this issue. Is there any connivance in this regard? It will be recalled that they made the society ungovernable, under the previous administration, even when the subsidy issue was more obvious.

With crude oil price low and PMS selling at N145, this is the time these groups should engage government on these contradictions. Curiously, only the marketers are threatening to down tools over payment.

No Labour group or CSO is asking questions about absence of transparency and reform in the oil sector candidate Buhari promised to sanitise in 2015.

The other issue is why these crises and threats would always surface during the end of year period.

Should government not be sensitive to the plight of Nigerians over this period and thus provide sufficient fuel for their travels and other related activities? A recent report that some of the bills would be paid is not a sufficient safety valve since the marketers have reportedly rejected the unreliable piecemeal approach.

In order to lay this subsidy issue to rest, government may need to eliminate it completely and allow market prices to prevail, moreover, with the imminent completion of the Dangote modern local refinery.

The market should be able to adjust accordingly, since currently, there is no subsidy for diesel and kerosene and the heavens have not fallen.

All told, government should address the bureaucracy in the NNPC by reforming it.

It should also sign the Petroleum Industry Governance Bill (PIGB) into law to address some of the challenges currently being experienced in the oil sector.

Nigerians deserve better than what currently obtains in its oil sector. They should not be made to suffer unnecessarily for the recurrent poor management of activities in the sector.

But the one thing needful at the moment is to prevent fuel scarcity, lest we will remember that after all, nothing has changed after all, despite the change they promised, notably in the oil sector.


Culled from The Guardian

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