The real reasons for fuel scarcity in Nigeria – Kachikwu

Lack of sufficient reserve, low clearance speed of petrol at the ports, diversion of products are some of the reasons for the ongoing fuel crisis being experienced in the country, says Minister of State for Petroleum Resources, Ibe Kachikwu.

Mr. Kachikwu said this while speaking before a meeting of the joint committee of the Senate and House of Representatives. The meeting was convened to find a lasting solution to the fuel crisis.

“The causes were; first, diversion was very key, second, there were logistics issues,” he said. “Once those diversions began Apapa Wharf was a problem to be able to move things due to bad roads, lack of sufficient reserve in our system making us unable to respond to the supply gap arising largely from the fact that private sector pulled out from supply.

“There has been a loose enforcement on diversion in the country. We have not been able to police our depots adequately.”

He explained that disparity in the landing cost has prevented the private marketers from importing petroleum into the country.

“Going forward we need to address the issue of pricing, there is a disparity between landing cost and cost we are selling. If we are going to sell at N145, we need to put some mechanisms in place so that the private sector will go back importation. We have a committee looking at this and we are still going to submit a report for review.

From left: Permanent Secretary, Ministry of Petroleum Resources, Dr Folasade Yemi-Esan; Minister of State for Petroleum Resources, Dr Ibe Kachukwu; and Group General Manager, NNPC, Mr Maikanti Baru, during the Senate Committee on Petroleum Downstream Sector’s public hearing on fuel scarcity in Nigeria, at the National Assembly in Abuja on Thursday (4/1/18). 0075/4/1/2018/Hogan Bassey/NAN

“Currently, the landing cost of product is N170 to N171 and we sell at N145 and the price we are allowed to sell is N145.”

He said the executive is currently working on modalities to permanently resolve the petrol crisis and prevent it from rearing its head any other time.

“We need to make marketers responsible for every tank of fuel up until point the point of delivery.

“One mechanism will be to look at working with CBN to have an exchange rate mechanism that enables them to stay at N245 price. If we do that, then they (marketers) can import without price differentials.

“In moments of normalcy, we are fine. In moments of emergency, our system is slow to respond. We also need to address our refineries.”

The fuel scarcity across Nigeria has been on for about one month and worsened during the Yuletide season. While the scarcity has reduced in major cities like Abuja and Lagos, due to the efforts of the NNPC and petroleum ministry, it is still on in many other states like Kano and Akwa Ibom. In such states, many filling stations that have the product still sell at over N200 per litre, contrary to the N145 per litre official price.