The Federal Government, on Thursday, said the current fuel scarcity may persist till June, 2019, when government and private refineries will fully come on stream.
It hinted that until then, it will manage the current crisis. According to the Minister of State for Petroleum Resources, Ibe Kachikwu, the fuel scarcity will be managed until the ongoing repairs and construction of refineries are completed.
He spoke when he appeared before the Senate committee on Petroleum Downstream, investigating the current fuel scarcity.
The Minister, who was accompanied by the Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mr. Maikanti Baru and other officials of his Ministry, also revealed that the increase of crude oil in the international market usually affects the local market in Nigeria.
Speaking further on the issue, Kachikwu also attributed the crisis to diversion of PMS products by independent marketers. He said some marketers diverted products to neighbouring countries.
On solutions, Kachikwu gave three recommendations. He called for a special foreign exchange price modulation for independent marketers. He called for plural price system, where independent marketers can sell PMS products at different prices, while NNPC outlets will sell at the official N145 per litre.
Kachikwu also called for a special tax consideration for independent oil marketers to reduce their financial burden. He said if the government adopts any of the three recommendations, the issue of fuel scarcity will be temporarily handled until refineries come on stream.
Kachikwu said: “What this country needs is to ensure that the refineries work. It is shameful that after more than 50 years, we still do not have working refineries. Selling crude is like selling raw agricultural materials. Once the private refineries start working, this scarcity issue will be behind us. Before we get there, we have 18 months to manage this problem.”
“On behalf of Buhari, I apologise for the difficulties Nigerians faced over the fuel scarcity suffered during the festive seasons. Our sympathies go the Nigerian people. I will not say much.
“All I can say is that there are lots of issues. The major players stopped importation because of the price difference in landing cost. Once that happened, NNPC started providing 100 per cent products to the local market.
“There are issues on ground. Some are due to non payment. Whenever situations like this arise, other issues arise. People moved products to other countries and decided to hide the products. We had to move in and release these products.
“What this says for me is that the business model of oil is not where it should be. If the prices of refined products escalate internationally, we do not react when we should. When it increases internationally, it has its own effects here. Between now and 2019 when our refineries will start working, we will have to rely on importation.
“During the 18 months emergency period, we need to look at pricing. We need to find a way to get marketers back to importation. Landing cost is about N170-175. We sell at N145. We need to address this problem. There are series of items. But the key item is the international selling price for sale of refined product.
“There is a gap. How do we deal with the gap. Whatever we do, we need to free the marketers to do their business. Exchange rate when price was tagged at N145, was N205. One model is for the CBN to create a special exchange rate for independent oil marketers to import their products. This will help.
“Is there a way to grant tax holiday for them? Government can look into the taxing system. If they do that, marketers will have more funds to import products. Potential of having a plural pricing system? That is, NNPC outlets can sell at N145, while independent marketers can import at their rate and sell at their own rate. Until we deal with this issue, we will not get out of the problem.
“We have not been able to deal with the issue of border policing. It is still more lucrative to sell this product outside the country. I am proposing that trackers be placed on trucks leaving the depots. That is one way to deal with this issue,” he added.
Baru on his part, claimed that 4,500 trucks loaded with PMS had been diverted within the period. He said the diversion of the product, is significantly adding to the continuous scarcity.
The GMD said NNPC is yet to get a mandate to increase pump price, but did not rule out any possible future increment.
He explained: “At no time have we not had products in this country. The root causes of this crisis was the rumour in the media that there was going to be an increase in sale of PMS. Marketers started hiding products because they wanted to make profits. There were lots of diversions to centres where the products were supposed to be dispensed.
“NNPC has not been given any mandate to increase price. PPPRA has not been given any mandate too to increase the price of PMS. Independent marketers withdrew from importation of PMS since October. NNPC took over the importation of PMS 100 per cent in October.
“Consumption is about 27 million litres a day, but for logistics purpose, we make provisions for 35 million litres. We had products that would have lasted for 23 days all through the Christmas period. But people went into panic buying. About 4,500 trucks loaded with PMS were diverted during this period.”
Chairman of the committee, Senator Kabiru Marafa, in his earlier remarks, said fuel scarcity is now a reoccurring decimal in the nation’s history. He described it as worrisome and urged those concerned to get to the root causes of the problem.
Marafa said: “The fuel scarcity has become a reoccurring decimal in our national history. When our government came into power, we were able to tame the monster of fuel scarcity. Due to several factors, we could not do that during the last festive period. This is very worrisome and we need to get to the root causes of this ugly incidence.
“Our committee was recalled to find solutions to this problem and ensure that this ugly incidence does not come up again. The National Assembly decided to make it open to all Nigerians by showing it live on television so that people can see and hear what the issues are. We will only address the issue of the lingering fuel crisis. The assignment is to look at the fuel crisis and why it has lasted this long.”
Marafa mandated Kachikwu and the Executive Secretary of Department of Petroleum Products (DPR) to furnish the committee with the relevant documents to support their claims.
“You have from now till 16 of January to submit names of filling stations that diverted, hoarded and sold fuel above regulated price. We also want DPR to come up with stiffer penalties to serve as deterrents.
“You have stirred the hornet’s nest. You need to speak more on the landing cost. Is this N171 what Nigerians will pay at the filling stations or what? We do not agree with that figure. We have our facts and figures to confront whoever comes up with that figure,” he said.
By Ehisuan Odia..
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