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Fuel Scarcity Persists Despite N407billion Subsidy Payment

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Fuel queues continue to mount in many parts of the country despite the recent payment of N407 billion subsidy claims to marketers. The queues are worsening in Abuja, Kano and many states, both in the north and south of the country. Nigerians intending to travel home for the Christmas and New Year celebrations have started to voice concerns about the lingering fuel shortages. In states like Kaduna, Kebbi, Sokoto, Nasarawa, River, Enugu and Niger, petrol is sold above the government regulated price of N87 per litre.

The federal government had last week released N407 billion as subsidy to oil marketers. Before the payment, the marketers attributed the scarcity to non-release of the fund but there has been no respite for motorists as the long queues continue in most filling stations, indicating that Nigerians may spend the Christmas searching for petrol.

In Abuja, there were long queues of vehicles yesterday at the Conoil and Total filling stations opposite the Nigerian National Petroleum Corporation (NNPC) headquarters at the Central Area, leading to obstruction of traffic. Similar scenes were observed at all other fuel stations that dispensed the product within Abuja city centre and suburbs.

Sources at the jetties in Lagos told Daily Trust that 8 to 9 million litres of petrol are released every day to the marketers. The sources said ships laden with petrol had been berthing since last week at the jetties. Records from the Nigerian Ports Authority yesterday revealed that about 10 ships were waiting to berth at the jetties in Lagos before the end of the year.

But oil marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) say normalcy would return from next week as they had received their subsidy claims from government and started importing petrol.

Executive Secretary of MOMAN, Mr.  Femi Olawore, told our reporter in an exclusive interview that majority of its members had collected “everything except one or two that have collected about 50 to 60 percent (of their claims)”.

He said: “Since we got the money we have placed orders. Some of us are getting spot cargoes. As I speak, at least three of our members are bringing (in cargoes). One has 25,000 tonnes, another has 33,000 metric tonnes which is about 42 million liters discharging, another one is bringing 60,000 metric tones-that is about 78m liters between now and Thursday. If you add this up you know we have started.” The secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Danladi Pasali, yesterday blamed the scarcity on the supply gap created recently by the non-payment of subsidy claims.

“Another problem that the government failed to address was the failure to pay the bridging cost for the marketers for the last three months. Some marketers that were supplying 10 trucks from Lagos to the hinterlands are no longer supplying due to the paucity of funds”, Pasali said. He urged the government to quickly remove the subsidy and allow marketers import products and sell directly and encourage local refining.

Meanwhile, the Minister of State for Petroleum Resources and Group Managing Director of the Nigerian National Petroleum Corporation, Dr. Ibe Kachikwu yesterday dispelled insinuations that the government had concluded plans to increase the pump price of fuel from N87 to N97 per liter as from January 2016.

Speaking during a media parley at the NNPC Towers Abuja, Dr. Kachikwu noted that the discourse had long left the realm of subsidy removal to a more scientific price modulation approach which entails an elastic price mechanism regime to be reviewed periodically to reflect the prevailing international price of crude.

“I did not say that refined petroleum products will sell for N97 per liter next year. I said that between a band of N87 and N97 we are going to be looking at prices and today the prices are largely close to N87. So, there is no need to change the price’’, he said. The minister noted that to determine the price of petroleum products in future, the Petroleum Products Pricing Regulatory Authority (PPPRA) would undertake quarterly reviews of the crude market situation.

He said, “I have not put a static figure. PPPRA will have to do the calculation to be able to announce what price of PMS will sell for in January; but we do not anticipate any major shift because of the price of crude today.’’

In a related development, the Nigerian Extractive Industries Transparency Initiative (NEITI) has welcomed possible policy shift by the federal government towards removal of fuel subsidy, describing it as a step in the right direction.

Acting Executive Secretary of NEITI, Dr Orji Ogbonnaya Orji, said the proposal to remove fuel subsidy was consistent with the recommendations contained in NEITI’s independent audit reports conducted in the past six years, adding that the policy had served as a tool by the rich to exploit the poor.

Addressing a Policy Roundtable on Subsidy Removal Debate organized by the Shehu Musa Yar’Adua Centre in Abuja,  Dr Orji said: “From NEITI’s independent audit report, over N4 trillion has been paid as subsidy to marketers from 2006-2012. The breakdown of the subsidy shows that N2.197 billion was paid as subsidy in 2006. This rose to N236.64 billion in 2007 and N360.1billion in 2008. In 2009 the country paid N198.1billion as subsidy for petroleum products and in 2010 the subsidy payment rose to N416.45 billion.

The payments skyrocketed to N1.9 trillion in 2011. Payments for oil subsidy declined to N690 billion in 2012 following the subsidy protests across the country in January of that year”.