Is Nigeria about to witness another period of petrol scarcity?

Petrol Scarcity: Are queues about to return to gas stations?

Oil marketers are about to shut down their depots and embark on a strike. If this happens, Nigerians may just be in for another season of petrol scarcity.

Nigerians should brace up for another period of petrol scarcity, unless a resolution arrives soon enough.

And no, this is not even one of those rumours generated at beer parlours.

Oil marketers have issued a seven-day ultimatum to the federal government, stating that they will embark on a strike and shut down all depots across the country if their outstanding debts totalling N800 billion in subsidies, are not paid them.

The marketers comprise Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association (DAPPMA) and Independent Petroleum Products Importers (IPPIs).

Patrick Etim, legal adviser to IPPI, says banks have taken over investments and assets of oil marketers over unpaid debts.

Oil workers about to down tools

According to Etim, marketers have been left with no choice but to ask employees to down tools over unpaid salary arrears due to huge subsidy debts owed by the government.

“The only way to salvage the situation is for government to pay the oil marketers the outstanding debts through cash option instead of promissory note being proposed,” he said.


“As I speak, nothing has been done several months after assurances received by government saying it would pay off the outstanding debts.

“The oil marketers have requested that forex differential and interest component of government’s indebtedness to marketers be calculated up to December 2018 and be paid within next seven days from the date of the letter sent to the government.”

Some of these huge debts were accrued under Jonathan

According to Etim, at the inception of the Muhammadu Buhari administration, oil marketers discussed how to clear backlog of debts accrued by the Goodluck Jonathan administration. But those discussions have yielded little, he lamented.

“At the inception of the current administration, marketers engaged the government with the view to secure approval for all outstanding subsidy-induced debts handed over to the current administration,’’ he said.

Mr. Olufemi Adewole who is executive secretary of DAPPMA, also confirmed the seven-day ultimatum notice.

According to Adewole, on November 28, oil marketers served the ultimatum letter on the Debt Management Office (DMO), Minister of Finance, Chairman, Senate Committee on Petroleum Downstream, Department of State Services and Minister of State, Petroleum Resources.

“We urge the DMO to process and pay marketers in cash for their outstanding forex differentials and interest component claims, together with the amount already approved by the Federal Executive Council (FEC) and the National Assembly,” he said.

“Marketers are not in a position to discount payment on the subsidy-induced debt owed as proposed by DMO.


“The expected payment is made up of bank loans, outstanding Admin charges due to PPPRA, outstanding bridging fund due Petroleum Equalisation Fund (Management) Board and in a few cases AMCON judgment debts.

“We urge that the Federal Executive Council (FEC) approved payment instrument, (the promissory note) be substituted with cash and paid through our bankers to stop the avoidable waste of public funds through these debts accruing interest”, he said.

Essentially, the oil marketers are asking the federal government to clear all subsidy debts owed during the Jonathan administration or there will embark on a nationwide strike that will cripple the petrol distribution network and lead to gas shortages across cities.

How petrol subsidy works

The Nigerian government subsidizes the price of petrol at the pumps for consumers. Meaning that Nigerian consumers pay a portion of petrol cost, while the government pays the rest.

The portion paid by the government is called subsidy.

Subsidy is defined as a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low.

How much is Nigeria paying for petrol subsidy at the moment?

In April, the Group Managing Director of the state run Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, said the federal government subsidizes petrol for Nigerians to the tune of N774 million daily.

In April, Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, was quoted as saying that subsidy on Premium Motor Spirit (PMS), otherwise known as petrol, currently stands at N1.4 trillion monthly.


Kachikwu would later say he made no such remark and that his comments had been taken out of context.

In 2016, Kachikwu who at the time doubled as NNPC GMD, claimed that Nigeria had successfully ended the petrol subsidy regime.

The Buhari administration prefers to refer to ‘subsidy’ as ‘under-recovery’, and its policy on petrol subsidy remains relatively unclear.

In 2012, Nigerians hit the streets to protest the removal of petrol subsidies. The strike action and protests crippled the nation's economy for weeks, leaving the federal government on the defensive.

Oil subsidies remain a popular, controversial and political tool in Nigeria where over 86 million people are poor.

At the time of filing this story, the federal government was yet to respond to the ultimatum strike threat from oil marketers.

Sustained periods of petrol scarcity, no thanks to industrial action from oil workers, are commonplace in oil rich Nigeria where crude is exported and the refined proceeds imported.

Consumers invariably pay for the shipping cost of the refined product at the pumps. 

Source: news

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