Why petrol queues re-surfaced in Abuja, Lagos

AT A. A Rano filling station in Nyanya, Abuja, on Tuesday, motorists jostled for petrol, also known as Premium Motor Spirit (PMS). Attendants at the petrol station cut off sales to customers with containers so they could attend to vehicles and ease traffic.

An attendant at the petrol station, who identified herself as Sarah, told The ICIR that the station had been out of petroleum products until  Monday when they received supplies. She noted that a litre of petrol was being sold at 162.5 naira.

“We have not been selling petrol for a couple of days because we ran out of petrol, but we got supplies on Monday and we are selling at the normal price,” she said.

Findings by The ICIR on Tuesday revealed that queues by motorists for petrol grew worse in Abuja and its outskirts, including the neighbouring Nasarawa State, as few filling stations dispensed PMS during the weekend.

Some of the filling stations visited by The ICIR included: Total petrol station at Wuse Zone 6; Oando petrol station at Wuse Zone 4; Total Petrol Station at AYA, and Sani Brothers petrol station at Nyanya.

They were all open to customers except Sani Brothers, Nyanya, which did not have petroleum products at the time of filing this report.

However, there were huge price increases at the black market in Wuse as seen by The ICIR, with operators selling petrol in small 10-litre containers at between 3,000 to 3,500 naira.

In Lagos, a number of petrol stations were selling at 170 naira in Apapa and Surulere axis as of Tuesday evening.

Speaking to The ICIR, Dipo Oladeinde, an energy  reporter, attributed  petrol scarcity to hoarding of petroleum products by oil marketers in a bid to do brisk business.

“It is not likely that there is lack of supply of petrol at the depot,” he said.

“The petrol stations are hoarding the petroleum products because if the anticipated pump price increase is implemented, then they would make more profit after hoarding their current reserves of petrol- bought at lower prices,” he said.

Though petrol queues resurfaced within Nigeria’s major cities last week, the Nigerian National Petroleum Corporation (NNPC) still insisted that it had enough to keep the country afloat for 40 days.

In March 2020, Nigeria announced it had ended the costly fuel subsidies, and said in September that it was no longer responsible for fixing pump prices. This  saw petrol pump price increase from 145 to 165 naira per litre.

Why Is Petrol Scarce?

The immediate cause of petrol scarcity is not clear, but the NNPC in a press statement, through its spokesperson Kennie Obateru, on Monday, attributed the scarcity to product hoarding or arbitrary increase of pump price by marketers, induced by panic buying.

In February 2020, the NNPC had extended its one-year contract with 15 oil firms until June to exchange more than 300,000 barrels per day in a crude oil for petrol swap deal. This was set to expire in October 2020.

The swap deal supply, also known as Direct Sale, Direct Purchase (DSDP), supplies nearly all of Nigeria’s petrol and some of its diesel and jet fuel in exchange for barrels of crude oil.

In February. petrol marketers had planned to disrupt the loading of petroleum products at private depots in Lagos and other parts of the country in protest against a new payment method.

The new payment method adopted by the Petroleum Products Marketing Company (PPMC), a subsidiary of NNPC, would allow oil marketers that could pay for 200 trucks to load their supplies before those payinf for one or two trucks, but players said it would give an edge to major oil marketers in the sector.

The new payment method, called PPMC Customer Express, was suddenly imposed on marketers and the NNPC expected immediate compliance from oil marketers.

Shina Amoo, chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Ore Depot, in an interview, had said the process became cumbersome for oil marketers.

“The new payment requires various prerequisite documents like the renewal of bulk purchase, renewal of licence and several other documents that are not readily available.

“Within a few days of this new payment method, some northern big marketers have used the situation to shortchange independent marketers in the South-West. With this, fuel scarcity is imminent,” he had said.

Timeline of Petrol Hike From 2016

The pump price of petrol has registered inconsistent figures since 2016,  putting Nigerians on the edge.

In May 2016, the pump price of petrol was increased to 145 naira per litre, up from 86.50 naira where the previous government of Goodluck Jonathan had left it.

In March 2020, the pump price of petrol was reduced to 125 naira from 145 naira per litre.

In May 2020, the Petroleum Products Pricing Regulatory Agency (PPPRA) announced a new pump price band of between 121.50 to 123.50 naira per litre. There was a price increase in July 2020, to  140.80 – 143.80 naira per litre.

    In August 2020, it was again increased to between 145.86 and 148.86 naira, and was further raised on September 2, 2020, to 151.56 naira.

    The ex-depot price of petrol equally rose from 147.67 naira per litre to 155.17 naira per litre in December 2020. At the moment, petrol  is sold between 160 naira to 165 naira at fuel stations.

    The current landing cost of the importation of petrol is estimated at 180 naira per litre, which is 15 naira higher than the pump price at 165 naira. Experts say no business can afford to import fuel when its landing cost is below the selling price in the economy. This explains why the NNPC remains the only entity that imports fuel–with large sums as subsidies.

    With the petrol pump price currently hovering between 162 to 165 naira per litre across the country, there will likely be further price increases, especially as Nigeria becomes serious with deregulation of the sector.

    Amos Abba is a journalist with the International Center for Investigative Reporting, ICIR, who believes that courageous investigative reporting is the key to social justice and accountability in the society.

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