PRESIDENT Bola Ahmed Tinubu took the oath of office on May 29, 2023, and in his inaugural speech made a policy statement, “Fuel subsidy is gone” which threw the nation in disarray economically.
Almost a year after that statement, Nigerians are still suffering from the after-effects of the statement which triggered the rise in food prices and other commodities caused largely by a spike in Premium motor spirit (fuel) prices referred to as fuel in Nigeria.
President Tinubu at his inauguration said, “Fuel subsidy is gone, as subsidy can no longer justify its ever-increasing costs due to drying resources. We shall instead re-channel the funds into better investment in public infrastructure, education, health care, and jobs that will materially improve the lives of millions”.
This report is part of The ICIR series tagged, “Tinubu’s one year in office”, read here.
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The President’s inaugural statement on subsidy removal saw the pump price of a litre of petrol rise from N184 which was the price before the inaugural speech. After the “no more subsidy’ directive of the President, the price rose immediately to N500.
The petrol price rise resulted in an almost 200 per cent hike in the pump price of fuel causing panic buying, fuel scarcity, and an alarming increase in transportation costs and key household items.
To state the least, Nigerians are yet to recover from the consequences of the statement which has seen over 40 per cent rise in food inflation and core inflation currently at 33.69 per cent triggered mainly by energy prices.
About two months later, the price jumped from N500 to between N617 per litre at Nigerian National Oil Company Limited NNPCL, eliciting criticism from economically stranded citizens.
In response, the group chief executive officer of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, argued that market forces are responsible for the rising pump prices of petrol.
Kyari said the increase in the price per litre of petrol from over N500 to N617 is not a supply issue, assuring Nigerians that the country has “robust supply” of the vital commodity.
Some media outfits reported on another fuel scarcity in September 2023 as marketers shut their retail outlet stations in Lagos and other states.
Energy analysts also said the closure of filling station retail outlets by the NNPCL was to enable licensed major and independent marketers to participate in the importation, following the deregulation of the market.
Media outfits reported that the situation became widespread because of the inability of the marketers to import, mainly due to difficulties associated with sourcing foreign exchange and instability in the domestic market.
With some major marketers involved in the importation, fuel was reportedly sold for between N568 per litre and N590 in some parts of the country.
In October 2023, the Federal Capital Territory (FCT), Kaduna state, and other major cities across the country experienced a sudden scarcity of fuel.
Civil society organisations (CSOs) such as the Mega National Movement for Good Governance expressed concerns over the instability of prices of petroleum products resulting from policy somersault of the NNPCL and mounting allegations of monumental corruption within the company.
Several instances showed many petroleum product depots were deserted due to lack of supplies caused by currency volatility, as the landing cost fuel rose to about N720 per litre for independent petroleum marketers.
Petroleum products’ dealers stated that the landing cost was already N720, and the pump price should be around N729/litre in Lagos State if the Federal Government truly stopped subsidising the product.
They went further to state that, they cannot sell at the landing price, Why? NNPC is still subsidising these products, about a subsidy of more than N100/litre.
Due to this increase in petrol landing cost, filling stations were shutting down daily in large numbers, as it was becoming increasingly tough to run the business and compete with the NNPC pump price which was 100 litre lower than the .
A month after in November 2023, another scarcity was experienced in the FCT and others states Nasarawa, and in some South-East and South-South states which persisted for a few weeks.
Oil marketers stated that the reason behind the long queues at petrol filling stations in those locations was the insufficient supply of fuel by NNPCL.
The NNPCL, the sole importer of the product, refuted the oil marketers’ claim, attributing the queues in the affected areas, particularly Abuja, to a “price war”.
As of May 3, 2024, fuel scarcity was witnessed in Abuja, Lagos, and some parts of the country. This scarcity lasted more than two weeks with harsh effects on the citizens.
Although the major marketers kept mum during the scarcity, a statement released by NNPCL about the scarcity, said the tightness in the supply of premium motor spirit currently being experienced in some areas across the country was due to logistics issues, which have been resolved.
But days later, the fuel scarcity no longer exists although major marketers are now selling at slightly higher prices than the NNPCL with some above N700.
Commenting on the intermittent scarcity, an oil and gas expert and the former president of Major Marketers Association of Nigeria (MOMMAN) said the current petrol pricing does not reflect market realities, noting that this is the major cause of the current fuel scarcity.
The chief executive officer of 11 Plc and former president of the Major Marketers Association of Nigeria (MOMAN) Adetunji Oyebanji said told The ICIR, stating that the ongoing fuel crisis in the country is worsened by a mix-up of politics and economics in petrol pricing.
According to him, the price for diesel and petrol are usually similar in the international market, lamenting that the NNPCL pegs the price at N600 per litre in Nigeria, which is not sustainable.
The ICIR has earlier reported how the NNPCL price pegging is creating problems for marketers who struggle to sell at prices not at par with that of NNPCL.
This development creates tension and supply glitches in the petroleum supply business in the country.
Amala is a well detailed journalist who is passionate about using journalism to combat the spread of misinformation and disinformation in the media space.