Reasons for fuel Scarcity – Marketers

As the fuel scarcity enters the fourth day, with commuters and motorists in Lagos and its environs subjected to severe hardship, marketers, yesterday, denied hoarding the product. They, however, blamed the current scarcity on the delay in the release of the first quarter import allocations.

The marketers said: “We cannot hoard what we don’t have, government should avoid fire brigade approach to importation of petroleum products since we do not refine petrol in Nigeria.”

Another marketer attributed the unofficial price hike to increase in the ex-depot price from N91.50 kobo to N95 per litre. Added to other ancillary costs, he said that pump price is now between N100 and N105 per litre. “For instance, the union fees, which was 30 kobo, now hovers around 50 kobo. The transport cost has also increased”, he said. 


The Marketers noted: “If there is no allocation, you cannot go to the DPR to get import licence. Without the import licence, you cannot open a Form M. Without the Form M, you cannot approach the banks to open Letters of Credit, LC, for you to import. Without the LC, there is no dollar to buy the product and what you have left are empty depots and empty filling stations.”

Beyond the release of the quarterly allocations by the PPPRA, there are also the outstanding issues of reimbursement through subsidy claims as well as accruing banks’ interest charges, which are unresolved.

Added to these, is the non-approval of the 2014 national budget, which according to the marketers, is a drawback for all businesses, as expenditure for each sector of the economy is derived from the budgetary allocations.

“This is March, and the budget is not yet approved; of course, this will affect every other projection for the year,” an independent depot operator said.

Oil marketers are of the opinion that the only way to close the supply gap is to increase allocations for Q2, in view of the shortfall in Q1, while also resolving all outstanding issues with regard to subsidy payments and banks’ interest charges.

Apart from the delay in the payment of arrears for subsidy claims and delay in the release of import allocations, the current scarcity may linger longer than anticipated for a number of reasons.

First, marketers noted that it takes about two weeks from the placement of order with an oil trader or refinery to the arrival of the vessels at the depots.

However, this cycle may be reduced if there are vessels waiting at sea, then the turnaround time may be reduced, but the process remains basically the same. This is because, even while the vessel is hovering at sea, it will still require placing a formal order with the owners in Europe, mostly, Rotterdam.

However, the majors are optimistic that the current scarcity may not last beyond this week, as some of their members had already

 placed orders as soon as the allocations were released.

Accordingly, Conoil is said to have brought in 20 million litres and expecting another cargo of 18million litres. Similarly, Mobil Oil is expecting a vessel with five million litres by tomorrow, and a second vessel with nine million litres before the week ends.

Culled from Vanguard