Nigeria: Fuel crisis could be exacerbated by Russia-Ukraine conflict

By 'Tofe Ayeni
Posted on Wednesday, 23 February 2022 19:36, updated on Tuesday, 8 March 2022 15:50

Cars queue in front of the Nigerian National Petroleum Corporation headquarters to buy fuel in Abuja, Nigeria, Tuesday, May 26, 2015 (AP Photo/Sunday Alamba)/

Since 4 February, there has been a nationwide fuel crisis in Nigeria due to the scarcity of Premium Motor Spirit (PMS), caused by the importation of adulterated fuel from Belgium that could not be used and therefore had to be returned.

Group Managing Director of the Nigerian National Petroleum Company (NNPC), Mallam Mele Kyari, assured the country that they had: “taken every necessary step to restore supply into this country.”

He added: “We have placed orders significant enough for us to cross into March with at least 2.1 billion litres of PMS in our custody.”

What are the current effects?

Although the NNPC promised in mid-February that the scarcity would not last for more than a week longer, effects are already being felt, including increased transportation costs and long queues at filling stations.

Currently, the government-approved price is N142-N145/litre, but already most private depot owners have raised the cost to around N165/litre. There are rumours that this might further increase to N180/litre.

Industrial action

On 9 February, petroleum tanker drivers threatened a strike due to government failure to meet the October 2021 N621bn agreement to fix 21 critical roads.

We’re tired of accidents, being stranded on the roads for weeks, risk of attacks by kidnappers, bandits and terrorists.

Salmon Oladiti, national chairman of the Petroleum Tankers Drivers (PTD), a part of the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG), said in a press briefing: “We’re tired of accidents, being stranded on the roads for weeks, risk of attacks by kidnappers, bandits and terrorists.”

NUPENG announced the strike to go ahead via a 13 February press release. This unfortunate timing will only increase the fuel shortages.

Some civil society groups have called for the resignations of key officials. The coalition of concerned Northern Forum (CCNF), and NIGERIA FIRST,  have asked for both Kyari and Engr. Farouk Ahmed, CEO of Nigeria Midstream and Downstream Petroleum Regulatory Authority (MDPRA) to step down. The Conference of Nigeria Political Parties (CNPP) has also asked Kyari to resign.

History of fuel scarcity

Unfortunately for Nigerians, fuel scarcity is nothing new, and the first petroleum shortage can be traced back to the 1960s, under the military regime of General Yakubu Gowon.

In the years of General Sani Abacha, a notoriously corrupt military regime, over $2bn was diverted from the four state-owned refineries, which had a knock-on effect on the availability of fuel, causing a shortage.

More recently, in 2012, Nigerians were subject to fuel price hikes, although not due to shortages; the civilian government of President Goodluck Jonathan removed subsidies, which led to price increases. However, protesters under the banner of #OccupyNigeria fought against the decision for weeks, leading to a reversal.

The current global fuel climate

Global fuel shortages are currently underway as refineries are finding it hard to match supply with demand post-pandemic, meaning an increase in the prices of oil, gas and coal.

It is not a time to trade blame as is customary in Nigeria…but a time to come together to salvage the plight of the average Nigerian.

Nigeria’s current problem is due to the gasoline being off-specification, as opposed to a lack of imported supply. That said, the three big refined commodity traders to the country (Glencore, Vitol and Trafigura) are likely to be affected by the Russia-Ukraine conflict.

As Joanna S. Kao, the FT visual & data journalism tech lead discussed on the 22 February FT News Briefing podcast: “Some of the world’s biggest oil companies and commodity traders could be hit hard if the West follows through with sanctions against Moscow for any further invasion of Ukraine.”

If the sanctions happen, companies like Glencore will struggle to get supplies, which would cause shortages leading them to hike prices.

However, due to already high prices, there is hope that talks between Western leaders will not result in sanctions on Russia’s oil and gas supply specifically.

What can be done?

Minister of Petroleum Timipre Sylva reassured the public that the government and other related agencies were taking an all hands on deck approach to solving this current crisis.

However, Sylva urged citizens to not point fingers at the government: “It is not a time to trade blame as is customary in Nigeria…but a time to come together to salvage the plight of the average Nigerian.”

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