Fuel scarcity: The question of the ‘independence’ of marketers

by Alexander O. Onukwue

There is an ongoing scarcity of products in the country. Thinking through the roles being played by the various actors in the country’s fuel subsector, one cannot but wonder what the causes are given the expectation that there should be a certain form of independence from government in the market.

NUPENG, one of the major unions of petroleum workers, says its drivers are not on strike but have been lifting products to various parts of the country. Instead, the union attributes the ongoing scarcity to the workings of a cabal in the downstream sector. In its statement, NUPENG faulted the government’s policymakers for not paying attention to the union’s calls for the urgent need to rehabilitate the nation’s four refineries towards optimal functioning.

On the other hand, the Lagos state chapter of the Independent Petroleum Marketers Association of Nigeria (IPMAN) had threatened to shut down operations in its filling stations by the 11th of December due to the under-supply of Premium Motor Spirit (PMS) from the NNPC. Though the threat of strike action has been withdrawn, it is evident that the long queues being experienced in the country are due to the failures of the nation’s oil firms in administering the market efficiently.

This calls into question the “independence” of IPMAN as an association given that its ability to make products available in the country is so tied to the NNPC’s logistical successes or challenges. In its statement withdrawing its strike threat, IPMAN said they “don’t want to be seen by the government and the public as economic saboteurs, because we have a stake in the economic stability of this great country”. Would this mean that IPMAN is playing according to the tracks laid out for them by the Government because they too are beneficiaries of the system as presently constituted?

The current scarcity around the country has resulted from the drastic drop in the activities of marketers bringing products into the country. Loading at depots has reduced by more than 50%, leading to long queues at pumps and black marketers selling products at exorbitant rates. Top officials of the Depot and Petroleum Products Marketers Association are citing the slow rate of arrival of new imports of products by the NNPC at the Apapa wharf, according to a report by The Punch.

IPMAN and the general public rely on the government’s agencies working with the NNPC for both the availability of products as well as the prices. The Petroleum Products Pricing Regulatory Agency (PPPRA) is the agency of the Federal Government that determines the prices of products, an arrangement which some have argued does not lead to efficiency in the distribution of the products. Those who defend this, however, believe that the Government’s involvement in the determination of the prices of petroleum products will forestall any hijacking of the market by certain marketers who might yet fix higher prices for products when left to their devices.

At the FEC meeting on Wednesday, the directive was given to the Minister of State for Petroleum, Ibe Kachikwu, to see that the ongoing scarcity does not continue beyond this weekend. Minister of Information Lai Mohammed allayed fears that the Government could be planning to increase the price of petrol hence leading to the scarcity. Mr Mohammed’s explanation for the scarcity was that it was the nature of the winter season to generate a greater demand for petroleum products in colder countries.

One would think that the government would be pushing seriously towards reducing the reliance on importation of refined products by developing the capacity of the local refineries. Until this becomes a priority, issues if scarcity such as is being experienced at present will continue to come up. But will the cabal referred to by NUPENG allow for this to come to fruition?

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