According to
information gathered through investigations by SaharaReporters, Nigeria’s
current fuel scarcity is likely to persist and even worsen in the month of
December unless the Muhammadu Buhari administration takes radical steps to
address certain root problems,
“According to marketers and NNPC officials,
it takes three weeks to get refined petroleum into Nigeria after letters of
credit have been done. “Now that letters [of credit] are not going out of the
banks, there is the possibility that the scarcity will hit harder in December,”
one NNPC source declared”.
Among the problems causing the current fuel
scarcity are corruption, banking downsides, and a crisis management in the
Nigerian National Petroleum Corporation (NNPC).
It is becoming
alarming that pipeline vitalization is currently on the increase, as major
Nigeria depots are not in use,
“During our weeklong investigation, several
players in the oil sector, including government officials, bankers, and
petroleum analysts disclosed that the NNPC and the Pipelines Product Marketing
Company (PPMC) cannot store fuel products in three major depots at Mosimi,
Ejigbo, and Ibadan because a major pipeline supplying the depot has been
completely destroyed by vandals and brigands in Arepo, a town in Ogun State.
It is also
important to note that there has been gross sabotage as the cabal responsible
for corrupt acts perpetrated in the past regime have been allowed to find their
way back to the system,
“The PPMC’s ability to import refined crude
has been significantly impaired because the swap and offshore processing
agreements (OPA) introduced by the Buhari administration have not led to
transparency. A top source at the NNPC told SaharaReporters that the cabal in
the Nigeria oil industry that was responsible for the mismanagement and failure
of earlier swap arrangements had sneaked their way back into the scheme of
things”.
Presently,
there has been limit on importation of Petrol Motor Spirit (PMS) into Nigeria
with daily consumption pegged at 40 million liters per day on PPMC accounts. “All of Nigeria’s refineries have shut down,
unable to produce a single liter of petroleum products for local consumption.
Since the swaps and OPAs have failed and refineries are not working, the PPMC
is not able to supply up to 25 percent of the amount required of it as a player
on the supply chain.”
Economic
policies affecting banks have also affected Oil marketers who are responsible
for importing 45% of the country’s requirement; it becomes very difficult for
them to raise capital, as reported by SaharaReporters. “For instance, most marketers are unable to get foreign exchange
directly from their banks as used to be the case. Instead, they are often
compelled to buy dollars from Bureaux de Change, which means that they have no
access to forex from the banks at official rates.”
A banking
sector watcher stated that several Nigerian banks are on the cusp of distress.
“There is a huge strain on liquidity in many commercial banks as we speak,”
said the source. He added, “In fact, some letters of credits offered by these
banks to oil marketers have dwindled in value as the letters are not backed by
cash.” According to him, at least nine commercial banks in Nigeria are
undergoing some degree of distress and urgently looking for capitalization. “If
the trend doesn’t improve, then some letters of credit from Nigerian banks may
lead to longer than the usual 30 days to get fuel imports,” the source
added.
“To worsen
matters, the Central Bank of Nigeria (CBN) has discontinued its frequent sale
of dollars. Instead, the CBN now sells dollars only on Thursdays. “This is the
only source of forex to fund importation of fuel. And, week in and week out,
the amount being offered gets smaller and smaller per transaction,”” said
SaharaReport.
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