Saturday , 17 March 2018

Counting costs of perennial fuel scarcity on Nigeria’s growth targets

fuel hawkers
With the prolonged lull in the global oil market, many Nigerians are worried that the nation may not be able to generate adequate funds for the implementation of its short, medium and other development goals. They predicted that the prices which currently hover at over $40 per barrel may not be sustainable for long.
The Organisation of Petroleum Exporting Countries, OPEC indicated in its March, 2016 report that the world economic growth has been revised down for this year to 3.1per cent, after estimated growth of 2.9per cent in 2015. It disclosed that OECD growth in 2016 had been revised lower to 1.9per cent, slightly below the 2.0per cent seen in 2015.
The report disclosed that in the emerging economies, India and China are seen continuing to expand at a considerable pace of 7.5per cent and 6.3per cent, respectively. The report disclosed that Brazil and Russia, however, are now forecast to see a larger than expected contraction in 2016. It maintained that the world oil demand growth for 2015 stands at 1.54 mb/d to average 92.98 mb/d, in line with the previous report. The report maintained that global oil demand growth for 2016 also remains unchanged at around 1.25 mb/d to average 94.23 mb/d. It also added that in 2016, demand for OPEC crude is expected to stand at 31.5 mb/d, 0.1 mb/d, lower than last month, and representing an increase of 1.8 mb/d over the previous year.
While appreciating the deleterious effects of the lingering fuel scarcity on the economy, the Director General of Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, pointed out that the scarcity had made it impossible for transporters to source fuel at official price, thus compelling them to hike fares with the attendant price increases in consumer goods and services. Yusuf maintained that there was also serious loss of man hours in many sectors as a result of the problems associated with sourcing fuel for operations, noting further that the operational cost in many sectors have also increased, especially as investors now generate additional power to sustain operations.
The National President of Oil and Gas Service Providers Association of Nigeria, Mr. Colman Obasi indicated that the activities of his members who provide specialized services to International Oil Companies, IOCs have virtually been grounded because of the fuel scarcity. He observed that members of the association cannot carry out their economic activities anymore because of the scarcity.
“Our members provide many specialised products and services to the majors but cannot do much these days as a result of the situation. Those who still carry out their operations do so at very high cost,” he noted.
Specifically, investigations showed that the fuel scarcity has already impacted very negatively on the implementation of many projects and programmes in different parts of the nation. For instance, in Abuja, some residents who spoke with our correspondent admitted that the fuel situation has forced them to remain at home instead of going about their normal activities in the past few weeks.
A motorist, Mike Ezenwaenyi, told our correspondent that he planned to travel to village with his family during Easter but gave up the plan after three unsuccessful days of search for the scarce commodity.
“The other day I was almost getting to the dispensing point at one filling station in Central Area when they came and announced that the product is finished. This was after some four hours on queue. I had to cancel my plan to travel because you can imagine when the situation is like this in the capital city it will be more troubles in the hinterlands,” he indicated.
The scarcity also affected many activities in the northern states, including Kaduna. Despite the location of a refinery there, many filling stations were closed because of lack of petrol. Residents who preferred not to be named said in different telephone interviews that they preferred to stay at home because of the difficulty associated with transportation.
The situation was almost the same in Lagos and its environs where most filling stations were shut because operators had no product to sell to consumers. There were very long queues of automobiles at many filling stations that had limited stocks of the product. A liter of the product was sold at between N120 and N200 per liter, depending on location.
Consequently, illegal operators were seen hawking the product along major streets at exorbitant prices. For instance, the price of five liters of fuel rose from about N700 to N1, 500 while the price of 10 liters stood at N3, 000. Many major roads were empty on last Saturday and Sunday as automobile owners did not have fuel to move from one place to another. Some who made efforts to go out preferred to patronise the public transport system, popularly known as BRT. The situation was severe, particularly as there were no officials of the Department of Petroleum Resources, DPR to monitor and sanction illegal operators who took advantage of scarcity to exploit the general public. Investigations showed the agency did not have adequate plans to intervene during the holiday.
The scarcity also affected activities in Port Harcourt, capital of Rivers state despite the location of two refineries there which should assist to ensure the fuel is delivered to consumers because of proximity. Investigations showed that most filling stations were shut throughout the period. A few stations that had commercial stocks of fuel sold it at very high prices to consumers. Most filling stations sold the product in excess of N140 per liter. But the price was much higher in the black market. For instance, the price of 10 liter-jerry can hovered at between N2, 000 and N4, 000, depending on location in Port Harcourt and its environs.
Although, the scarcity appears to be a short term issue, observers said it could have a cumulative negative impact of the nation’s medium and long term goals and targets, including the Vision 20: 2020, if recurring fuel crisis is allowed to spill over into the years ahead. This could be a disaster as the visions aims at making Nigeria one of the most 20 developed economies in the world by the year 2020.
The vision is an 11 year economic transformation agenda (2009-2020) which is targeted at moving the nation to the league of top 20 economies of the world by the year 2020 with a GDP of $900 billion and per capita income of $4,000. However, the Nigerian National Petroleum Corporation, NNPC has acknowledged the sufferings of the people saying it empathise with the difficulties Nigerians are presently going through due to the current fuel situation. The Corporation assured that the government is not taking their patience for granted but urged Nigerians to continue to be patient because the difficulties being experienced as a result of the situation will soon be alleviated.
“We would like to assure all Nigerians that the Honorable Minister of State for Petroleum Resources/Group Managing Director, Dr. Ibe Kachikwu, and everybody else associated with this situation is working tirelessly round the clock to ensure relief is brought to Nigerians.
“Our immediate concern is to make petrol available through the interventions and processes put in place so that the queues will disappear within the next one to two weeks. As at 1600hrs of today, one (1)PMS cargo containing 42million litres has completely discharged, two (2) more PMS cargos with a combined ‘Remaining on Board’(ROB) of 44million litres are currently discharging while another PMS cargo containing 44 million litres is berthed and awaiting discharge. We have enough products lined up to ensure that the supply gap which created the problem is bridged. In order to ensure effective distribution we are working with Independent Petroleum Marketers Association of Nigeria (IPMAN), oil majors and over 1,000 NNPC staff, nationwide to ensure we overcome the obstacles in the distribution of the products,” it added.
The Corporation reiterated that this present management of NNPC and indeed the Government inherited huge and complicated problems with respect to importation, distribution and pricing of petroleum products. It tasked Nigerians to recall that the sum of N522,258,934,505 meant for payment of fuel subsidy, covering the last quarter of 2014 (October to December) and the entire 2015 was approved by the Senate in December 2015 in order to pay for subsidy arrears inherited by this government.
The Group General Manager, Group Public Affairs Division, Garba Deen Mohammed, in a statement noted that ‘for long term solutions, the NNPC and the Government is working to put in place machineries to ensure that our refineries are fixed and working optimally, while the pipelines which have been under attack for some time now are repaired. ‘The Direct Sale Direct Purchase (DSDP) arrangement for crude would commence in the first week of April and all these coupled with the fact that the President has given his support to increase the crude supply to NNPC to ensure local sufficiency of products will go a long way to solve the problems in the short and long term’.
However, some stakeholders have made suggestions, capable of assisting the nation to tackle the various issues at stake. For instance, the LCCI has stressed the need to urgently liberalise the downstream petroleum sector for unfettered private sector participation and investment, subject of course to an appropriate regulatory framework.
It indicated that there should be a level playing field for all operators, including the NNPC. It disclosed that this would put an end to the perennial problem of fuel scarcity in the country and the hardships suffered by citizens to fuel scarcity. The chamber noted that this would attract more investment, generate more jobs and reduce the pressure on the country’s foreign reserves. The LCCI maintained that the role of the NNPC needs to be clearly defined. Yusuf stressed that it should not be an operator and still have regulatory powers. He disclosed that a model that would allow for a level playing field for all operators including the NNPC should be adopted.
-          Udeme Akpan, National Mirror





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