Fuel scarcity: Cloud thickens against Yuletide

Nigeria, known for acute shortage of fuel during Yuletide, is on the cliff of another unpleasant incident, as major issues that usually plunge the country into nationwide fuel scarcity are gathering momentum.

The pumping of petroleum products to Enugu depot, hub of fuel supply by the Nigerian National Petroleum Corporation (NNPC) to entire south east region, has been halted. Before this unpleasant news was broken by the NNPC last Monday, the Nigerian Labour Congress (NLC) had staged a protest on demand for minimum wage. And the dust raised by this is yet to settle when major marketers of petroleum products in the country called a press conference where they declared that the debts the Federal Government owe them had not only surged to N130.7 billion but also that this is now a major threat to their business.
Though the Federal Government had through the NNPC assured Nigerians that there would not be scarcity but can Nigerians who had travelled through this route before believe this statement?
The issues highlighted below are to be considered before a yes or no question answer could be provided to the question.

Debts to fuel marketers
The Federal Government’s debts profile on fuel subsidy and taxes to major marketers of petroleum products in Nigeria have hit N130.7 billion mark.
Major Oil Marketers Association of Nigeria (MOMAN), which declared this, maintained that the amount was the harmonized figure as at August 2018 after over four years of absolute drought in payment of the outstanding money on subsidy.
Addressing a press conference in Lagos last Monday, Chairman of MOMAN, Mr. Andrew Gbodume, who noted that the subsidy trapped in the government’s coffers was credit facilities from banks, stated that the lenders have now embargoed credit facilities to oil marketers.
“Now some of our members find it difficult to pay salaries, whereas we are bound to review salary of our staff at a minimum interval of every two years,” he said.
One of the major challenges the Nigerian downstream petroleum sector is still facing, according to Gbodume, is the non-payment of the long outstanding fuel subsidy to oil marketers.
Banks, he said, are no longer willing to assist in providing further credit facilities to oil marketers.
“The nonpayment of outstanding subsidy funds is affecting our businesses,” he said. “Kindly, note that the facilities extended by banks must be serviced regularly. We appreciate the efforts of the National Assembly but the non-payment creates a significant negative impact on the operational efficiency of the downstream sector of the oil industry, thereby placing a severe strain on its efforts to continuously invest in infrastructure and raise industry standards.
“ We hope that the debts will be paid in full to the oil marketers as soon as possible.”
Corroborating Gbodume’s view, Executive Secretary of MOMAN, Mr. Clement Isong, added that the debts on subsidy plus interest as at August 2018 stood at N130.7 billion.
“The figure on tax continues to move and as we speak it must have been more than this,” he said.
Stating that the current model is unworkable and unsustainable, Isong, who expressed optimism over payment of the outstanding by government, commended the Pipelines and Products Marketing Company (PPMC) for quality of planning, which he described as impeccable.
“We cannot but acknowledge and appreciate the efforts of PPMC over the last few months in ensuring consistent supply of petroleum products within the country,” he said. “PPMC has demonstrated its resolve in guaranteeing a non-repeat of the scarcity the nation experienced at the end of 2017 and quite frankly has done well so far.
“However, with NNPC being the sole importer and supplier of petroleum products in Nigeria at the cost incurred, it should be clear to all Nigerians that this policy direction is not sustainable.
“We believe the path to fully achieving a sustainable operating environment for the Nigerian petroleum industry begins with the downstream private sector. We feel the time is now to encourage a well informed and honest debate amongst ourselves as Nigerians on our downstream pricing policy, showing sensitivity to the fears of Nigerians and the challenges we face as a people and as an economy to arrive at an equitable but sustainable business model.”

Labour’s minimum wage tussle
Penultimate Wednesday, NNPC cautioned consumers of petroleum products against panic buying as the planned nationwide strike by NLC heightened fears over possible hiccups to free supply of the products.
Group Managing Director of the Corporation, Dr. Maikanti Baru, who made the call, appealed to motorists and other consumers of petroleum products across the country not to engage in panic buying of products over the Nigeria Labour Congress (NLC) planned industrial action.
The Federal Government, Dr. Baru said in a release by NNPC Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, was seriously engaging NLC on the issues raised.
He quoted the NNPC GMD as affirming that the nation had 37- day petroleum Premium Motor Spirit (PMS), otherwise called petrol, self- sufficiency, assuring that all the NNPC’s depots across the country, including the private ones engaged by the Corporation on throughput basis, have an abundance of petroleum products to meet the needs of Nigerians.
The statement said all NNPC depot managers have been instructed to intensify products loading and other activities in their depots to avert any fallout of developments in respect of the NLC’s proposed strike.
Baru explained that NNPC would continue to meet the products consumption needs of all Nigerians wherever they may be within the shores of the country.

Surge in pipeline vandalism
The pumping of petroleum products to Enugu depot, hub of fuel supply by the NNPC to entire south east region, has been halted. The NNPC, which confirmed this, last Monday, maintained that this was a result of oil pipeline vandalism, which has prevented “pumping of Products to Enugu depot.”
The corporation said: “As calm returned to Osisioma Ngwa communities of Abia State following a fire incident last Friday, the NNPC has appealed to the host communities to help stem the spate of vandalism of oil pipeline.
“Preliminary reports of the fire incident, which recorded some fatalities and loss of properties affirmed that the inferno resulted from the activities of vandals who had breached System 2Ex Pipeline Right of Way (PROW) in Ososioma.”
The NNPC spokesperson explained that the confirmation of items such as jerrycans, among others, at the scene of the incident, by the report indicated that the activities of vandals in the area ignited the flame.
Ughamadu quoted the NNPC Group Managing Director, Dr. Maikanti Baru, as saying that the incessant vandalism of pipeline facilities along System 2Ex PROW had prevented the Corporation from pumping fuel to the Enugu Depot which has remained underutilized despite its recent rehabilitation by the NNPC.
Dr. Baru lamented the loss of lives and properties in the inferno, which occurred in the wee hours of Friday in Umuaduru and Umuimo communities both in Osisioma Ngwa, in Abia State.
The GMD appealed to host communities to collaborate with the corporation to tame oil pipeline vandalism in their areas.
Dr. Baru thanked the State fire servicemen and NNPC officials for their prompt response, which rapidly brought the situation under control.

Saudi’s threat of $200 pb oil price
The landing cost of Premium Motor Spirit (PMS) also known as petrol is in imminent threat of skyrocketing to N300 per barrel from N128. 79 per barrel it currently goes for.
This, which would worsen the fuel subsidy burden for the Federal Government and degenerate the under-recovery by the NNPC, is buoyed by the threat by World biggest oil exporter, Saudi Arabia, to inflict pain that would push crude oil price to as high as $200 per barrel if the United States goes ahead with threat to sanction the country.
The gulf state is engrossed in a case of alleged tortuous and murder of a journalist, Jamal Khashoggi, which is drawing global attention.
US President Donald Trump threatened to inflict “severe punishment” on Saudi Arabia if it is found to have killed the prominent Saudi journalist Jamal Khashoggi, who disappeared while visiting the Saudi consulate in Istanbul, Turkey.
Saudi Arabia, which has dismissed as “lies” claims by Turkish officials that Mr. Khashoggi was murdered by Saudi agents, has vowed to respond to any punitive action by Western powers “with greater action”.
While Nigeria is expected to get higher revenues if the diplomatic row pushes oil price to $200 per barrel, the country would also be inflicted with higher price for its refined products.
Nigeria, Africa’s biggest crude exporter imports over 40 million litres of petrol daily due to epileptic nature of its 445, 000 barrels daily capacity refineries in Port Harcourt, Warri, and Kaduna.
As at the last count, the country, which modulates and compels marketers of petrol to sell at N145 per litre, owes major marketers over N130.7 billion in subsidy and taxes.
While petrol landing cost stands at N122 per litre when crude oil was selling at $60 average, checks by this newspaper showed that the landing cost could go for as high as N300 per litre with $200 per barrel
Highlighting the possible implications of sanction on Saudi and the response of “greater action by the kingdom, Reuters reported that Saudi Arabia “possess about 18% of the world’s proven oil reserves and is the world’s biggest oil exporter, according to the Organization of the Petroleum Exporting Countries (OPEC). This gives the country significant power and influence on the global stage.
“If, for example, sanctions were imposed by the US or other countries, the Saudi government could respond by cutting its oil production, which would push up global prices unless other exporters made up the shortfall.
Reuters said: “In an editorial published on Sunday, the general manager of Saudi-owned Al Arabiya TV, Turki Aldakhil, said that imposing sanctions on the kingdom would result in an “an economic disaster that would rock the entire world.
“If the price of oil reaching $80 (£61) angered President Trump, no one should rule out the price jumping to $100 (£76), or $200 (£152), or even double that figure.”

Last line
NNPC nay Federal Government should go beyond assurance it has been giving to Nigerians over the impending scarcity. Nigerians have travelled through this route before and it would require more than assurances to get them to believe that this in-coming Yuletide would be different.Read More

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