For the umpteenth time in its history, Nigeria is suffering a fuel scarcity crisis. The situation seems to worsen as the days go by and much to the unsurprise of Nigerian nationals, the government isn’t doing anything substantial to fix it. How did the fuel scarcity come about? Why is it recurring? We’ll discuss these topics in this article as we talk about fuel scarcity in Nigeria.
Causes of fuel scarcity in Nigeria
The first question here is the causes. If you’re unaware, Nigeria is the largest producer of oil in Africa and ranks among one of the top producers in the world. How then is the country suffering a fuel crisis?
Well, fuel scarcity in Nigeria happens due to various reasons with the most common being the removal of fuel subsidies. In fact, the current fuel scarcity follows the announcement of fuel subsidy removal in November 2021. Although it was suspended, recent news revealed that the government plans to remove the subsidy in phases – it could be ongoing.
In a nutshell, fuel subsidy reduces the price of fuel and when it’s removed, the fuel price sky-rockets. When there’s subsidy, the government pays some part of the fuel price. The need to remove fuel subsidies arises if the government can no longer afford to pay the part price, especially when they intend channeling resources to a different cause.
Which is Nigeria’s case? According to the Minister of Finance, Zainab Ahmed, the removal of fuel subsidy is due to the increasing cost of oil across the globe. Now here’s the interesting part. Nigeria is the largest producer of oil in Africa but up to 90% of the petrol Nigerians use is imported.
This is because Nigeria doesn’t have sufficient refineries to process the oil they produce into petroleum products. As a result, we sell raw crude oil to other countries, they refine it and we buy it back.
At the moment, global oil prices are at an all-time high due to what the world has witnessed in the past few years. You’re already familiar with them – COVID 19, lockdown, and the recent Ukraine-Russia war. Seemingly, the Nigerian government has no other option than to remove the subsidy.
With such high prices, not all companies – filling stations as you probably know them by – can afford to purchase oil. Even if they do purchase, it won’t be in as much quantity as before. Since demand is high and supply is low, the product becomes expensive and scarce.
Possible solutions to fuel scarcity in Nigeria
The possible solutions to fuel scarcity has always been up for debate. Here are some of the options Nigerians propose:
1. Privatisation of the Petroleum Industry
Government control of the petroleum industry has had no effect on the citizens as petrol is still exported for refining and reimported at a higher price. Privatizing the petroleum sector increases the likelihood of refineries operating correctly, lowering the cost of importing the same natural resources.
Imagine the numerous taxes paid to the Nigerian Central Bank if it was the only financial institution in the country. Their responsibility is now limited to regulating other banks in the country.
In reality, privatisation will increase competitiveness. Though it may be costly at times, the product will always be available in the country. Where competition thrives, development is subsidized and prices are kept low.
2. Nigeria should stop importing
As mentioned earlier, Nigeria doesn’t refine her oil. They are refined in foreign countries and we pay money – a lot of money – to buy them back and this has been tolerated for long. The government should halt such unneeded initiatives and reopen the refineries. It will save and serve the country.
Nigeria needs to produce what they consume. Building and maintaining refineries is a good thing for crude oil. Nigeria will continue to face fuel shortages as long as it sells crude oil and buys it back refined.
3. Filling Stations Should Do Better
Marketers aren’t left out. In Nigeria, petrol marketers tie up their stations and wait for a price increase before selling it to make large profits. This is cruel as it affects all. Marketers should not profit at the expense of the comfort of Nigerians.
The NNPC should oversee marketers and guarantee that they sell fuel when they are available, not when earnings quadruple. Corruption on the part of the government, marketers, and other stakeholders is a key source of this fuel crisis.
What is the government doing?
From updates, the Nigerian government is doing everything they can to end the situation. But, just as mentioned earlier, the efforts are not substantial as we’re yet to see any results. Note that the fuel scarcity situation has been ongoing for over 2 weeks now.
The most recent from the government is the plan for a nationwide round-the-clock premium motor spirit (PMS) distribution. In other words, the Nigerian government plans to distribute oil all across the country from its reserves of about one billion litres of fuels.
According to reports, this distribution is already in progress with distribution in the capital city, Cross Rivers, Akwa Ibom, and Bayelsa. These are some of the major oil producing states in Nigeria so it’s not surprising for the distribution to start there; it may be where the reserves are kept.
Hopefully this is not only true but effective. If it is, then we could be close to saying goodbye to the long queue of cars and other vehicles in filling stations across Nigeria.