DSS ULTIMATUM AND FUEL SCARCITY
A full deregulation of the downstream petroleum sector will end shortages
Last week’s intervention by the Department of State Services (DSS) on the lingering fuel scarcity in the country was an act of desperation by a government that had lost ideas on how to resolve a persistent problem. The 48-hour ultimatum to the Nigerian National Petroleum Corporation Limited (NNPCL), Independent Petroleum Marketers Association of Nigeria (IPMAN) and other stakeholders in the oil sector could ensure availability of fuel for a few days. But it is not a solution to a systemic problem that has been with us for decades.
No sector exemplifies the failure of Nigeria more than the oil and gas industry. Aside from having to contend with wasting trillions of Naira annually on subsidy payments, a resurgence of fuel queues in major cities across the country has exposed the mess in the sector and there is need to demand accountability. The expectation now is that a full deregulation of the downstream sector (with implication of high fuel price) could guarantee fuel availability and free funds hitherto used in subsidy payment for other development. But in the absence of any clarity on that policy decision, the federal government must deal with the current problem.
For the past six months, the federal capital territory has been hit by acute shortages of petrol. This has led to long queues of vehicles at fuel stations causing traffic snarls and slowing down commercial and social activities. But the situation has since degenerated and is now national. As the problem persists, numerous productive hours are being lost while people’s savings are getting ruthlessly depleted. At a period of extreme hardship with millions out of job, the patience of Nigerians is ebbing fast.
It is unfortunate that in the past six decades, oil has continued to raise hope and despair among Nigerians. As Nigerians groan daily at filling stations, the stark irony of our predicament is that citizens of the seventh largest producer of oil cannot fuel their vehicles. It is as confusing as it is frustrating. Yet, resolving the logjam is not a mystery. After all, countries like Ghana and Niger, who are not in the same category as we are, seldom witness such fuel scarcity.
The question that remains unanswered is whether Nigerians would ever see an end to the perennial scarcity that has come to define the management of the downstream sector of the petroleum industry. This should worry the current administration, especially since there seems to be no coherent policy in place to deal with the issue in a holistic and lasting manner. For years, the falling price of crude was the ‘saving grace’. But the country is now badly exposed at a time of high crude price occasioned by the current war between Ukraine and Russia.
Meanwhile, the refineries have continued to fail in terms of satisfying the essence of their establishment, given that the importation of petroleum products has become a major and running routine in the economic management of the country. The reason, as often adduced by the industry experts, is that the refineries have either all broken down due to poor maintenance culture or that the installed production capacity cannot meet the ever-growing local demand for petroleum products. Yet, hundreds of billions of Naira are pumped into them every year.
While it makes no sense that Nigeria continues to import finished petroleum products at huge cost to the economy, experience has also shown that the government is not adept in the efficient management of businesses. If anything, the tales of corruption, ineptitude, sabotage and other sharp practices in the oil and gas industry have continued to confirm this widely held opinion.