One of the first major fuel queues was witnessed in Lagos Nigeria in August 1974, four years after the war and fifty years by this month. Today, the phenomenon has not disappeared from our sight and psyche. Those who have lived up to the golden age have witnessed the scenario and rather than abating, it has become worse, with fuel queues becoming a familiar sight in major cities nationwide.
This problem briefly subsided during the early days of the fuel subsidy regime but intensified again towards its end, continuing to be prevalent in the post-subsidy era. The causes are not far from funding issues, supply shortages and price fluctuations in the products’ market. With worsening fuel scarcity, the hope has been that the removal of fuel subsidy will offer us a way out of the constant scarcity.
The situation worsened during the Babangida administration when the government undertook the turnaround maintenance (TAM) of the four state owned refineries, leading to increased fuel importation to supplement the limited supplies from the local refineries. However, TAM efforts became a recurring and seemingly unending process, and fuel importation turned into a profitable venture for certain individuals, who took advantage of the subsidies and even engaged in cross-border smuggling.
It is no longer news that the oil and gas industry is one of the most opaque and corrupt sectors in Nigeria. Efforts to reform the sector have been consistently hindered by vested interests, and ordinary citizens have borne the brunt of these manipulative practices. Persistent vandalism and exploitation by certain groups have also led to declining production levels, exacerbating the situation.
Domestic refining of petroleum products could alleviate the burden of importation and subsidies, but implementation continues to face challenges. It does not require any spiritual prophecy to realise that domestic refining of products would reduce the weight thrown on the country by product importation, including subsidising the transactions.
It does not take rocket science to achieve it, but there seems to be a negative spirit that perpetually stalls the implementation and achievement of simple goals which examples abound in other climes. The Nigerian government appears constrained in addressing this issue and is frequently sidetracked due to public dissatisfaction with its inconsistent policies on the local production of essential products.
Last year, President Bola Ahmed Tinubu announced the end of the fuel subsidy regime during his inauguration, stating that Nigerians would now be paying market prices for products, including premium motor spirit (PMS), which had previously been heavily subsidized. Since then, PMS prices have increased significantly, causing ripple effects across the economy, particularly in transportation costs, leading to increased prices of goods. Added to the state of insecurity that has prevented farmers from accessing their farms, the rise in transportation costs has resulted in widespread hunger and frustration.
The removal of the PMS subsidy was met with praise and condemnation from different segments of society, each viewing the situation from their perspectives. Some argued that measures should have been implemented to mitigate the inevitable hardships. Others maintained that the country’s fragile economy could not bear further burdens and was at risk of collapse without drastic intervention.
The issue of domestic production of petroleum products has been a longstanding problem, and it has become incredibly embarrassing. The government has been unable to get any of its four refineries working for seventeen years. Unfortunately, private individuals’ efforts to address the situation have been mired in unnecessary controversies, particularly regarding crude supplies. Before Dangote Refinery made its concerns public, operators of modular refineries in the country equally complained about low crude supplies.
We had expected that a government focused on energy security and intent on solving the subsidy challenge would have embraced the Dangote option to address the issue, especially since the government-owned refineries have been unable to tread that path. The Nigerian government should have seized the opportunity when Dangote emerged and overlooked its shortcomings until the government could restart its refineries; at least as a stop-gap measure.
We are nonetheless aware that Dangote, which has no fewer than two productive oil wells, should have made adequate preparations for its feedstock supplies before beginning production. This would have saved it from its current challenges. Regardless, considering the current realities and the hardship caused by fuel importation, the government should embrace the Dangote Refinery, at least temporarily, as a national asset that needs protection. The government should provide all necessary assistance to local refineries to help address the current energy challenge in the country.
While we do not support private companies unfairly taking advantage of the system or misusing public resources through unethical business practices, we believe that in desperate situations where urgent challenges need to be addressed, some flexibility may be necessary. The government should be willing to make concessions in order to tackle pressing issues, while still ensuring that everyone follows the rules under normal circumstances.
In this wise, the authorities in the petroleum sector should have been more concerned with the national interest and acted in a similar way to what the Aviation Minister, Festus Keyamo, did in ensuring that Nigerian airlines are treated by British authorities as fairly as the British airlines that come to Nigeria are treated. We think that the Dangote Refinery should also be seen in that light for now, until the government can put its own house in order. It should ordinarily be a source of national pride.
The government should therefore do everything legally necessary to ensure that Dangote Refinery and other smaller refineries operate for the benefit of Nigerians. If these refineries work, people will be relieved of the perennial long queues at fuel stations and the ongoing debates about fuel subsidies.
The government needs peace and quiet to achieve its goals. This peace can only be guaranteed if the population is satisfied and calm. As long as there is dissatisfaction among the population, the government cannot achieve its plans. The people are no longer interested in who is producing or supplying fuel; they want regular fuel supply at affordable prices. We understand that crude supply from the Presidential Crude equity stock cannot adequately meet the needs of local refiners and requires a substantial volume from international oil companies (IOCs). Despite the financial obligations the IOCs have, the government can still intervene for the sake of national security.
The government should actively encourage and enable private sector-led investment in local refineries as a deliberate policy. It has become obvious that government agencies cannot effectively handle the fundamental challenges of the industry. The government should support the successful operation of local refineries against stifling local and foreign interests. The Nigerian National Petroleum Company Limited (NNPCL) should operate strictly within the stipulations of the Petroleum Industry Act, 2021 as an operator and should stop interfering with regulatory, marketing, and pricing issues that fall within the jurisdictions of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream/Downstream Petroleum Regulatory Authority (NMDPRA).
Now the question remains: Why can’t we just do the right thing? Why can’t our refineries work? It is evident that some persons do not want the refineries to work for selfish reasons, but the government has the responsibility to save the country from the grips of saboteurs. We cannot continue to spend scarce foreign exchange on importing items that can be produced locally. The government must provide an enabling environment, even if it means bending over backwards.
