Saturday, 9 January 2016

FUEL SUBSIDY, HOARDING AND GUERILLA MARKETING!

Fuel scarcity is back in Nigeria in a monstrous dimension. It started in the last quarter of year 2015 and continued unabated. This is a man-made plague that is big business for some and big trouble for others. The menace makes government look irresponsible and out rightly insensitive. In a way, the government is fighting a system and the system is fighting back only this time, with the latent potential of turning the people against their leaders.

Since 1998, Nigeria has been spending billions of Naira on subsidy of petroleum products to cushion the effects of the increase in pump price of the products. Unfortunately, the refineries are not working at full throttle and even if they are, they can only produce half of the country’s demand implying the other half will be sourced from other countries. As if this is not bad enough, the 22 fuel depots across the country owned and managed by the state owned Pipelines and Petroleum Marketing Company (PPMC) is moribund and in dire need of rehabilitation. Due to these reasons, government licensed private investors to import petroleum products into the country, store and distribute to various filling stations across the country through trucking.

The independent marketers presently import 50% of the country’s daily consumption while the state owned Nigerian National Petroleum Corporation, NNPC imports the balance of 20 million litres. Good a thing, it has been reviewed to 78%/22% for the NNPC/Independent marketers. Better still, if it is 100%/0! As a result of this imbroglio, it looks to many, like the NNPC is doing nothing!

Yet, the NNPC imports refined products and distributes accordingly while the independent marketers import their quota and may decide to distribute or not depending on how they feel about issues of pricing variations generally referred to as subsidy. They hoard their quota and the vacuum created makes the NNPC’s ration grossly inadequate to nourish the voracious appetite of consumers.

The Petroleum Minister, through the Directorate of Petroleum Resources (DPR) has shut several independent fuel depots and filling stations across the country for hoarding fuel. Some defaulting filling stations have had their product dispensed free of charge to consumers.

Apparently, these measures are not deterrent enough as the practitioners have found ways round it! The NNPC says that the landing cost of premium motor spirit (PMS) otherwise referred to as Petrol across all depots is N77.00/litre for which it must pay a subsidy of about N10.00/litre. Petrol presently sells at government regulated price of N87.00/litre but at the height of the menace, it can sell for as much as N400.00/litre! The independent marketers complained that they owe banks for the last import they made and government must pay them their accruable subsidy for things to be normalized.

Government on its part, said the subsidy was not captured in the last budget and at such went ahead to make a supplementary budget to capture the close to N500B subsidy payments, approved by the country’s national assembly and dispensed to the marketers. While this was ongoing, the consumers were suffering, the artisans were gnashing their teeth and the economy was being asphyxiated.

Apparently the racketeering marketers have devised devious means of checkmating the DPR onslaught as they dispense fuel in the late hours of the night or wee hours of the morning because they believe the DPR officials work from 8:00hrs to 17:00hrs daily. They in turn sell fuel at the depots and at the filling stations between 19:00hrs to 22:00hrs and 05:00hrs to 08:00hrs of the night and day respectively at rates far higher than the approved rate. Small wonder fuel tankers move more in the night than in the day during fuel scarcity, man-made, that is.

These carefully selected hours of dispensing fuel by the independent marketers are not rigid but very flexibly sensitive to DPR inquisitions and the stark truth is that any DPR official that attempts to sanction the erring marketers will probably meet with the wrath of irrationally desperate consumers. It is that bad. This, therefore, is how the independent marketers are making humongous profit out of a well concocted problem in the name of the government and in solidarity with the people!

The options open to the government is to continue paying subsidy to the independent marketers while fixing the refineries and depots, appoint the NNPC the sole importer of refined petroleum products into Nigeria which they can now sell to independent marketers for effective distribution to consumers across the country and at government approved price or privatize the refineries, the depots and allow free market economy take control.

Of all these options it is certain that the most cost effective, people friendly and chaos sensitive is for the NNPC to be the sole importer of fuel in the short term, while fixing of refineries and depots is ongoing and in the medium term, privatization. The racketeers have inflicted terrible pains on the people and the country for far too long, it is time to put them where they belong; A cage! Yes, it is time to take care of the subsidy challenge once and for all and effectively decimate the racket behind the market. (Source: Guardian)