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Fuel Scarcity 6 steps Nigeria can take to stop petrol crisis

Nigeria has been battling fuel scarcity forever. The solution is right here at long last.

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6 steps Nigeria can take to stop petrol crisis play

Osinbajo interacting with people at an Oando filling station in Lagos during petrol crisis

(Twitter)

If you spent your Christmas hustling for petrol to power your car or generator, please accept our heartfelt sympathy.

You certainly were not alone in this agony.

What does Nigeria need to do to break out of this endless cycle of petrol scarcity especially around Christmas time?

What do we need to do as a nation to prevent this suffering that comes with petrol scarcity from recurring?

Here’s a list of six commonsense solutions our leaders don’t want to think about….

1. Liberalise the market

Osinbajo says govt’s burden is to defend territorial integrity, rights play VP osinbajo turns petrol attendant as scarcity bites harder (Twitter)
 

Government has no business running any business. Yeah, you read that right.

The petroleum downstream sector is a huge business that should be weaned off government control. Yes, crude oil accounts for over 70 percent of government revenue, but that doesn’t mean government should continue to dictate what happens in the sector.

A country where the Nigerian National Petroleum Corporation (NNPC) still imports petrol for everyone, is not a serious country.

The NNPC doesn’t even have the capacity or the storage facilities to continue with this herculean endeavor. Why then don’t we allow Uche, Musa, Effiong and Babatunde to venture into the business, import petrol and sell as the market dictates?

Petrol is a product. Economics says if Mr. A, B, C and D all sell the same product, competition will someday make Mr. C sell at a lower price to beat Mr. A.

It’s called market forces.

Demand and supply is what drives any economy. Not government regulation.

Yes, petrol pump price could spike initially in a deregulated market, but someday, competition could force pump price of petrol down like every other product in the market.

Besides, the NNPC would also be a player in this market and could decide to sell its own petrol at government subsidized, friendly price.

But to allow the NNPC to continue as the sole importer of petrol in a government regulated market is economic madness.

2. Refine our own petrol

OilRefinery play Kaduna refinery (The Nation)
 

Point me to another country that exports crude oil and imports the finished product.

Nigeria is a basket case. Literally.

A sorry case, I beg your pardon.

We have refineries in Warri, Port Harcourt and Kaduna that can’t cater to our domestic needs because corruption has made them comatose.

In any case, the refineries are probably so outdated right now that even a turnaround maintenance can’t bring them to life.

To get out of this perennial fuel scarcity, Nigeria has to begin to produce and refine the petrol it consumes. It’s not rocket science.

The reason we have scarcity now is because NNPC imports petrol. So, the product is sometimes inadequate or remains at sea for God knows how long, or is subject to the whims and caprices of the international market.

Our refineries have to start working. Nigeria has to refine its petrol and not sell its crude and import same. That is the definition of idiocy.

Private firms should be handed licenses to run modular and standard refineries alongside government ones. If we have as little as 100 refineries serving the domestic market, we won't be here.

We’ll keep having this problem every time the landing price of petrol at the port goes above the government approved pump price.

I won’t import petrol for N175/liter and sell for N145/liter because Buhari says so.

One of the mantras of the Buhari administration is “we must produce what we consume and consume what we produce.”

That isn’t happening in the downstream sector at the moment. Time to fix up.

3. Deal with the marketers

Nigeria's Kaduna refinery restarts -NNPC play Petrol scarcity cripples Nigeria (Reuters)
 

Independent marketers are so powerful, they can decide to store the product in depots or tank farms while anticipating a price hike from government in the New Year.

That’s one of the reasons why we keep having these shortages of gas. 

The action of the marketers is called economic sabotage and economic sabotage is a crime.

I have been buying a liter of petrol at a nondescript gas station near my house for N200 per liter since this latest crisis began.

Basically because I need to power my generator to be able to write for Pulse, I end up at this petrol station where attendants take me behind the scenes, point me to gallons of petrol and ask me to buy petrol above the government approved pump price.

I and other buyers do nothing because we have no choice in the matter.

This is what happens across the land. There is petrol, but it makes more economic sense to the marketers to hoard, make the product scarce and sell at a higher price. When demand surpasses supply, prices go up.

That’s where we are right now. There’s demand, artificial scarcity and greed from marketers. It’s the perfect recipe for queues at gas stations.

The Department of Petroleum Resources (DPR) and relevant government agencies need to arrest some major and minor marketers and make them cool their heels in jail for a while, just to serve as a deterrent.

Otherwise, we’ll be back here in December 2018.

4. Kill corruption

NNPC GMD, Ibe Kachikwu visits Kaduna refinery play Minister of State for petroleum, Ibe Kachikwu on an on the spot assessment of refinery (NAN Photo)
 

One of the biggest challenges confronting Nigeria is the scale of corruption across all sectors of the economy.

The oil sector is no different.

Petrol tankers divert the product meant for the Nigerian market to neighbouring countries by paying off Customs officials or other border patrol units.

It’s more profitable selling Nigerian petrol in Benin or Niger than selling same in a government regulated market back home.

This has been going on for years and it’s something we’ve got to stop.

5. NNPC has to improve storage facilities

karamin ministan Mai Ibe Kachukwu tare da shugaban NNPC Maikanti Baru (Punch) play GMD NNPC, Baru and Kachikwu after their media face-off (Punch)
 

So, NNPC imports this petrol and because it has no capacity to store the volume of petrol it imports, it hands the task of storage to major marketers.

Some of these major marketers wait for December when the demand for petrol is high and strike. They make more money by telling you and I that there’s little petrol in their tank farms.

They then sell the product at the black market while you and I sweat it out on long, agonising queues. It’s a vicious cycle.

Why can’t the NNPC have as much storage facilities as it can manage and call off the bluff of these independent marketers?

Why does the NNPC need to come to Apapa to get petrol that would be distributed round the country when it can establish depots in all major cities that would serve adjoining towns?

ALSO READ: Did Kachikwu leak his own memo?

Why do we need tankers to lift petrol from Lagos when we can distribute petrol through sophisticated and secure underground pipes across Nigeria?

The NNPC seriously needs to up its game.

Until the corporation proves to the independent marketers that it can do this business without them, Nigeria won’t get out of this scarcity problem.

6. Buhari has to hand over petroleum ministry

Ibe Kachikwu and President Buhari play President Buhari and Kachikwu (signalng)
 

I have written extensively on this before, so I’m going to be very brief on this one.

The president has no business keeping the role of substantive petroleum minister for himself. It’s a huge task that one shouldn’t combine with running what is a difficult country.

Buhari has to trust Kachikwu with the job of overseeing this ministry or hand over the ministry to someone else he can trust.

Simple as APC ABC.

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