Fuel scarcity, Long Queues, PMS Price Increase to Last until Next Year

A report from the House of Representatives Committee on Petroleum Resources (Downstream) stated on Wednesday that the persistent fuel scarcity in the country is expected to last until next year.

 The report confirmed that one of the reasons for the fuel scarcity is the outstanding debts owed oil marketers, the debts are over N141billion.

The report said the debts have weakened the spirit of oil marketers, saying the marketers hardly import the product because banks are no more willing to extend further credit to them.

It further blamed the Minister of Finance, Dr Okonjo Ngozi-Iweala and the Petroleum Products Pricing and Regulatory Agency (PPPRA) for the scarcity, adding that it was their responsibility to see to the problem.

The report from the House of Representatives Committee on Petroleum Resources (Downstream) was released following persistent long queues in filling stations across the country.

The report urges Nigerians to hold strong and prepare for the worst because it appears they will be an extended scarcity of Premium Motor Spirit (PMS) since Banks have refused to give out more credit to the marketers.

It also informed that System 2B has collapsed, system 2B distributes about 70 per cent of petroleum products from Lagos, Mosimi, Ejigbo, Ibadan, Ore, and Ilorin.

The report was presented to the House yesterday by the Chairman of the Committee, Dakuku Peterside.

The report further lamented the situation, which the Ministry of Finance has withheld payments of marketers under investigation as well as the inadequate provision in the 2012 budget for payment of subsidy. It also said not more than N306billion was allocated to PMS in the N888billion reserved for payment of subsidy

“The delay in payment to petroleum marketers traceable to the Ministry of Finance is adversely affecting the availability of reduced and credit worthiness of marketers. At a point, it took not less than six months to process payment due importers, it said.

“The collapse of Syatem 2B which distribute about 70 per cent of petroleum products starting from Lagos, Mosimi, Ejigbo, Ibadan, Ore and Ilorin severely affected the distribution system.

“Too many inconclusive investigations are affecting the willingness of banks to give credit, and thus importers given allocations by PPPRA cannot perform. For instance, out of 37 companies that was given fourth quarter allocation, only 19 performed by bringing the product into the country.

“There is a marked decline in investment in the downstream sector due to very low profit margin that has been gradually building up due to lack of storage facilities as has been observed over time.”

The Committee recommended the following,

     ”That the Ministry of Finance pay every marketer being owed and whose claims have been verified by all relevant authorities immediately.
    “That in 2013 budget, the Petroleum Support Fund (PSF) should be skewed in favour in PMS by the Ministry of Petroleum.
    “That all investigations carried out by the Presidency in the oil and gas industry should be concluded within a time limit.
    “That PPPRA should give allocation to only marketers that had performed
    “All necessary steps should be taken to determine the actual quantity of daily consumption of PMS that will enable the country plan ahead.”


Source: Business news

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Nigeria faces prolonged fuel scarcity

Nigeria may face prolonged fuel shortages with importers hindered by a lack of credit and the state oil company unable to meet demand, a retailers’ association said.

Many fuel importers are no longer credit-worthy and can’t finance new orders, Taofik Lawal, a Lagos-based spokesman for the Independent Petroleum Marketers Association of Nigeria, said on Nov. 13 in a phone interview. “The current fuel scarcity may not be over soon since there’s still disruption in supply.”

Nigeria depends on fuel imports to meet domestic needs because of inadequate refining capacity. It pays importers the difference between regulated prices and import costs.

President Goodluck Jonathan’s attempt to end the subsidies in January provoked a week of strikes and protests, forcing a partial restoration.

Since then, transactions with importers have come under increased scrutiny after a parliamentary probe said about $7 billion was paid illegally as subsidies to importers. The government suspended payments for further verification and halted fuel-import authorizations, saying that many importers made false claims to collect payments.

“No bank will want to give you access to funds if they know that you have problems with government with regards to your previous imports,” Lawal said.

Fuel imports to Africa’s most-populous nation with more than 160 million people, which accounts for about 70 percent of domestic supplies, are funded by loans from banks which must be repaid within 90 days. Importers are unable to meet lenders’ loan requirements because the government’s verification process takes longer than stipulated repayment deadlines.

NNPC, as the state oil company is known, has enough gasoline to meet domestic demand for at least 30 days, Fidel Pepple, a spokesman for the company, said by phone yesterday from Abuja. “As far as we know the products are available” and “we’re doing the distribution to the best of our abilities,” he said.

“The government needs to fully deregulate the industry otherwise the long queues will continue,” said Bismarck Rewane, chief executive officer of Financial Derivatives Co., a Lagos- based business advisory.

Four state-run refineries built to meet domestic demand are in disrepair and are producing well below installed capacity of 445,000 barrels of crude a day. Nigeria exchanges 60,000 barrels a day of crude for products with Trafigura Beheer BV and a similar amount with Societe Ivoirienne de Raffinage’s refinery in Ivory Coast, according to NNPC.

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