Fuel Scarcity Looms as Forex Shortage Halts Importation
Oil marketers are increasingly worried they can’t import petrol due to the dollar shortage in the country. Despite the deregulation of the downstream sector, concerns have been raised about the potential comeback of the country’s persistent fuel scarcity.
Expectations were high when oil marketers canvassed for the removal of fuel subsidies, and deregulation of the downstream sector. Many were optimistic that the deregulation of the downstream sector would break the monopoly of the Nigerian National Petroleum Company Limited in petrol importation and bring an end to the country’s perennial scarcity of the product.
However, months after President Bola Tinubu pronounced an end to fuel subsidies on May 29, the country has not been able to end NNPCL’s monopoly in petrol importation.
After the first batch of 27 million litres of petrol imported by Emadeb Energy in July, independent oil marketers have not been able to bring in a single drop of petrol. The national oil firm has remained the sole importer of petrol.
The monopoly in the downstream sector has made a mess of the deregulation of the sector, giving NNPCL the power to continue to fix prices and putting the country at risk of fuel scarcity.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority and NNPCL had argued that other marketers were free to import petrol, as those who had applied for importation licenses had been given.
The National Controller Operations of the Independent Petroleum Marketers Association of Nigeria, Mike Osatuyi, told The PUNCH that marketers were not importing petrol because of forex scarcity and the increasing price of crude oil at the international market.
“Marketers are not importing because of the price. But the pro forma invoice still exists, and marketers can still pick it up from the NNPCL since it is still the only one importing,” he said.
Oil price rose to $94.95 per barrel on Thursday and a dollar was exchanged for N770 at the Investors’& Exporters’ forex window and 985/$ at the alternative market.
Emadeb Energy’s Chief Executive, Adebowale Olujimi, during the arrival of the product vessel in June, said petrol importation was not “sustainable”.
“Petrol importation is not a sustainable way for a country to run. From what we saw when PMS price rose to over N600 per litre, it is an indication that the dynamics of the business is a tough one. It requires huge US dollars to bring in this. The way forward is for local refineries to be revived,” he said.
A source in the Major Oil Marketers Association of Nigeria told our correspondent that the market was deregulated so that other independent marketers could also bring in their products. He explained that it was supposed to give rise to healthy competition, which would eventually bring down prices. That dream, he said, was now a “mirage”, as marketers had not been able to access forex.
“NNPCL has reduced importation. And the whole idea was for private individuals to also import petrol to augment what NNPCL brings in. But marketers are not importing. So, NNPCL still remains the only importer,” he added.
The NNPCL’s spokesperson, Garba-Deen Muhammad, told our correspondent in June that the company would cut down its fuel imports programme in August when the Dangote Refinery commences operations.
