Fuel scarcity fears scare Nigeria

Global Business

Petrol stations across Nigeria are closing as fuel scarcity fears spread across that country.

Fuel scarcity fears scare Nigeria

Fuel scarcity fears scare Nigeria

Major oil marketers stopped importing petroleum products over a backlog of unpaid subsidy claims. Scarcity fears and closing stations have Nigerians queuing up for long waits at fueling stations across the West African country. Authorities blame the long lines on panic buying.

Major oil marketers stopped importing petroleum products over a backlog of unpaid subsidy claims. Scarcity fears and closing stations have Nigerians queuing up for long waits at fueling stations across the West African country. Authorities blame the long lines on panic buying.

Most petrol stations in Lagos are out of fuel.

“I have been on the queue here for over 30 minutes. The queue is too long We don’t know what is going on,” said Danjuma, a Lagos resident.

“It’s not a good experience at all. I”m surprised that the Nigeria of today is like this. But what do we do. They told us they would sell and they are not selling. We don’t know what is happening so I’m standing here by faith.” another resident said.

The latest round of scarcity ensued after major oil marketers stopped importing petroleum products over a backlog of unpaid subsidy claims, which they put at $264 billion.

Tied to that is the high cost of the dollar as result of the devaluation of the Naira.

The major marketers import close to 60 percent of the fuel consumed in Nigeria.
Energy expert Olugbenga Adesanya says the marketers are making a legitimate demand.

“You have a situation where the business of fuel importation is no longer attractive. The importers face the challenge of repayment of the subsidy which somehow is being held illegally for months. The cost of capital is high. Then when you now get a loan from a bank and you are not paying as at when due, you’re penalized as a company,” Adesanya said.

Nigeria consumes about 40 million liters of fuel per day. Much of that is imported and sold at a subsidized price. The government pays the subsidy. In 2014 alone, it paid close to a trillion Naira in subsidies to major oil marketers. It has though slashed down subsidy payment in this year’s budget to 100 billion Naira, but some experts are pushing for its complete removal.

The government and the major oil marketers have now reached a deal for the payment of the 264 billion Naira subsidy arrears by the end of March. That figure is more than the entire subsidy budget for this year.