Nigerian National Petroleum Company (NNPC) Limited Group Chief Executive Mele Kyari has clarified that Nigeria’s fuel shortage challenges are not due to supply constraints.
Mr. Kyari said this during an interview earlier today on Good Morning Nigeria on NTA News Network.
Kyari’s argument: The CEO of NNPC said that Nigeria is a huge country where the demand for fuel is high. Consequently, up to 1,700 fuel trucks have to be on the road daily, and it will probably take two weeks to make a round trip to deliver fuel. Once there are accidents and other road trip problems, there is a technical problem. This failure becomes a major supply/distribution problem.
He further explained that sometimes panic buying comes into play, when consumers buy more than they now need, putting additional pressure on supply levels. He said there is no fuel shortage and consumers are simply responding to the realities facing the country today.
One of the realities that he pointed out is the fact that the queues are more in the service stations that sell at regulated prices (180 per liter), while those that sell at arbitrary prices (up to N350 per liter) do not have queues. He said:
- “We don’t have a supply problem because, as we speak now, we have more than 28 days of supply even if we evacuate up to 60 million liters of PMS every day. We have a distribution issue that arises as a result of the change in the cost of logistics in our business that gets fuel from mother ships to terminals to trucks to fuel stations.
- “Several things have changed and we do not have an automatic adjustment system that resolves this as a consequence of the fuel subsidy regime that we are currently operating in the country. However, fuel subsidy payments are understandable to protect consumers from the whims of market forces.
Why Fuel Prices Are Ridiculously High: Mallam Kyari said that once there is a failure, people take advantage of it. He argued that, in the sense of recovering costs, market players tend to escalate arbitrage to unreasonable levels.
Mallam Kyari also said that the recent meeting held with stakeholders across the value chain brought some fruits and all stakeholders are now ready to work together to ensure normality is restored when it comes to fuel purchases. He said there is an understanding that some of these warehouses where challenges occur are addressed and logistics costs are managed effectively.
- “Once depot prices go down, gas station prices will plummet and that arbitrage will go away. Then people will see that prices at stations, whether owned by NNPC or independent sellers, will have a certain normality and fuel lines will disappear.” he stated.
across borders: Mallam Kyari said Nigeria accounts for more than 70% of consumption in West Africa and the country has neighbors who cannot afford to import petroleum products. He maintained that based on data and monitoring of the movement of petroleum products, Nigerian fuel can be found in other countries.
According to him, there is hardly a country in West Africa where Nigerian fuel is not found. Therefore, it is almost impossible to eliminate cross-border smuggling until the arbitration challenge is removed.
commitment chain: In the course of his interview, Mallam Kyari said that NNPC understands the frustration of Nigerians. However, he noted that the NNPC is part of the chain of engagement regarding the availability and distribution of fuel in Nigeria.
He said that the NNPC has its limits and can only intervene to solve some challenges such as the reconstruction of roads, to facilitate the distribution of fuel. He said Nigerians should understand that there is a presence of greed throughout the value chain: depots, gas stations, trucks for those on road trips, where all kinds of fees are charged (state, local government) and these add to logistics costs. . He also pointed out that this greed is not present in the NNPC.
For the record: On Wednesday, February 1, Nairametrics reported that Independent Marketers Association of Nigeria (IPMAN) National Operations Controller, Mike Osatuyi, assured that Nigerians will likely see more fuel availability in the next two weeks.