Black – Market Petrol at N350/litre Mocks Subsidy

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Many Nigerians living in Lagos have had to resort to the black market for petrol on the back of the scarcity of the product, buying a litre at almost the same price they would have paid at a filling station if subsidy was removed.

Black marketers have been having a field day since last week when fuel queues resurfaced in Lagos, the country’s commercial city, selling petrol for as much as N350 per litre on Wednesday, compared to N220-N250 at filling stations.

Following calls by labour unions, which have remained silent during the latest round of petrol scarcity, Nigerians pressure the government to keep petrol subsidy and wonder why the Central Bank of Nigeria (CBN) has zero receipts from oil sales.

Labour unions are mobilising Nigerians to fight against petrol subsidy removal, insisting the government fix the moribund refineries before removing subsidy.

Analysis by BusinessDay showed that the average price of petrol in the country is N350 per litre, 112 percent higher than the regulated pump price of N165 per litre.

The Nigerian National Petroleum Company Limited (NNPC) has blamed the lingering petrol queues in Lagos and Abuja on ongoing construction projects in the states hampering efficient distribution, saying it has about 2 billion litres of petrol in stock.

Adeyemi Adetunji, executive vice president, downstream at NNPC, at a news conference in Abuja on Tuesday, said ongoing road infrastructure projects around Apapa and access road challenges in some parts of Lagos depots have constrained movement to depots.

“We want to reassure all Nigerians that NNPC has sufficient products, and we significantly increased product loading including 24-hour operations in selected depots and extended hours at strategic stations to ensure products sufficiency nationwide,” he said.

Adetunji also said NNPC has a national petrol stock of over 2 billion litres, equivalent to over 30 days of sufficiency.

The Federal Government says the official price of petrol is N165/litre but depot owners have been buying from NNPC for about a year at N185/litre when the approved rate is N147/litre.

Some retail stations told BusinessDay that in the coming days, the ex-depot price of petrol could reach N210/litre as some depots have raised the price to N200/litre.

Nigeria’s downstream petroleum regulator, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, no longer goes about pretending to arrest petrol stations selling above the government regulated price.
The government, labour unions, the NNPC and even most Nigerians know that selling petrol at N165/litre when oil prices are rising to $100 a barrel, when petrol price everywhere else in Africa is over N500/litre, is unsustainable.

But labour unions believe that local refining will drive down the price of refined products.

The Federal Government sells Nigeria’s share of crude oil extracted in partnership with the local and international oil companies to the NNPC at N360/$ and further subsidises imported petrol through crude swaps arrangement with international oil traders.

Zainab Ahmed, minister of finance, budget and national planning, recently told lawmakers that the Federal Government spends N18.397 billion on petrol subsidy daily.

These subsidies hobble NNPC, which in July unveiled a plan to become a commercial entity and deliver dividends to the federation. What should have been delivered as dividends goes to paying for subsidies in arrangements fraught with corruption, findings show.

To worsen the matter, half of the imported petrol, of which the government paid subsidies for, are smuggled out of Nigeria and sold in Ghana, Cotonou, Yaounde and Sudan.

The NNPC puts Nigeria’s petrol consumption at over 60 million litres daily, up from less than 30 million litres in 2015, while petrol stations in Cameroon and Benin Republic are shutting down because their citizens prefer cheaper black-market petrol smuggled from Nigeria.

Rising crude oil theft and shutdown of oil fields by local producers mean Nigeria is not earning enough to keep up with the subsidy. Dollar from oil sales has dipped. This is why the CBN is raising alarm over falling oil receipts.

“Dollar shortages and distribution challenges are worsening the problem,” said Chinedu Okoronkwo, president of Independent Petroleum Marketers Association of Nigeria.

Chinedu said petroleum marketers are expected to get the products from tank farm owners at N148.19 per litre. However, they now receive the products at N185-N210.

In the meantime, Nigerians continue to suffer scarcity of petrol. Many are going through untold hardship to get their workplaces. Some leave as early as 4am to queue for petrol, many resort to buying black market, and transport fares have doubled.

Earlier in the year, the importation of adulterated petrol by the NNPC led to damage on vehicle engines of many. There is no telling what unscrupulous young men hustling black market petrol can mix with the products to make more money.

Many retail stations in Abuja were shut due to lack of products. The same situation played out in parts of Nasarawa and Niger states.

In Lagos, queues for petrol have formed at many filling stations, worsening traffic and leaving many stranded at bus stops across the state.

“It is frustrating,” said Sodiq Usman, a motorist. “I couldn’t get fuel after queuing for more than four hours at the filling station.”

He ended up paying N1,500 to buy three litres of petrol from a hawker, so his infant daughter can have a good night’s sleep because he’s sure there won’t be power that night.

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