As fuel marketers continue to blame high cost of Automotive Gas Oil (diesel) for the continued shortage of Premium Motor Spirit (petrol) in Nigeria, the Major Marketers Association of Nigeria (MOMAN) and other stakeholders have called on the Federal Government to, in the interim, boost the local refining of diesel to drive down the price of diesel and make the product more cheaper and available for Nigerians.
The petroleum products marketers had in a report earlier published by EnergyDay, identified rising prices of diesel as one of the factors responsible for long queues of vehicles spotted at major filling stations in some parts of Lagos, Ogun, Oyo and Abuja.
The rising price of Diesel was linked to the rise in the price of crude oil in the international market, due to the Russia-Ukraine crisis, and the fall in the value of Naira.
While refined petroleum products come from Ukraine and other Western European countries, Russia is an oil-producing country, which has no doubt impacted the price of diesel in Nigeria.
Based on the provisions of the new PIA, the Federal Government, through the Nigerian National Petroleum Company Limited (NNPC), is obligated to supply modular refineries in Nigeria with feedstock needed for the production of diesel.
EnergyDay’s check, however, revealed that indigenous manufacturers of diesel are currently short on crude oil supply for production due to the Federal Government’s failure to honour the provisions of the Petroleum Industry Act (PIA).
For instance, the 10,000bpsd (barrels per stream day) Omsa Pillar Astex Company (OPAC) Refinery in Kwale, Delta State, recently constructed, is presently not producing due to lack of feedstock from the NNPC.
Reactions by stakeholders
In a statement obtained by EnergyDay, Olumide Adeosun, Chairman of MOMAN, in a statement obtained by EnergyDay, stressed the need to encourage local production and relax importation of diesel in Nigeria, to lessen the impact of the ongoing Russian-Ukraine crisis on prices of petroleum products.
According to him, to address the current “energy security” in the country, local producers of petroleum products must be given encouragement to contribute to the supply chain. According to him, a phased deregulation of the downstream sector was suggested to address the challenge.
He attributed the current hike in the price of AGO (diesel) to rises in the international prices of the product, triggered by the ongoing war in Europe.
The MOMAN Chairman stated that the keen interest shown by high-profile people in the 2023 pre-election process, is also responsible for the recent glitches in the country’s oil sector. He noted that the politically exposed public office holders are already engrossed in issues concerning the coming general elections.
He said, “It is very clear that there is a leadership vacuum, and at the same time, unfolding macro and micro events are hampering energy security in Nigeria.”
“We should be looking at boosting diesel production locally.” We need to give local producers support, “he said.
The MOMAN boss noted that it was inevitable for diesel prices to have risen, especially in the international market, as the invader-Russia, from whom the West and some other countries have refused to purchase the products, supplies 45 percent of total diesel used in the world.
Adeosun said MOMAN is currently trying to support transporters by reducing the price of AGO, to help them with fuel needed to distribute PMS to different parts of Nigeria.
Akin Oyegbola, President of the Association of Professional Bodies of Nigeria (APBN), for his part, blamed the nation’s stunted economic growth on high inflation, insecurity and perennial fuel scarcity.
Oyegbola who made this known during a press conference on the second APBN 2022 board meeting held in Abuja, on Thursday, said, companies and factories have or were on the verge of shutting down as a result of the high cost of diesel.
He said, “In recent months, we have experienced continuous astronomical increases in the cost of diesel as well as a scarcity of petrol in some major cities. While we have no problem with the excuse offered by the government for the scarcity and price hike, its effect on the economy can only be imagined.
“This re-emphasises the need for local production of petroleum products, especially Diesel. We believe development of local refining capacity is the way out of the incessant cases of petrol scarcity.
“The economic losses due to the high cost of diesel are massive. Inflation is very high. Many companies, factories, and airlines have or are at the verge of shutting down due to the unsustainable cost of fuel.”
The APBN President therefore called on the Federal and State governments to engage the civil, business and professional bodies, for the development of the nation.
“Any economy that wants to develop must find a way to enlist the services of its professionals.” We believe the Nigerian governments (national and sub-nationals) are not doing that enough.
“The board would therefore like to call on those in government to begin to look inwards for assistance.”
“APBN boasts an array of qualified professionals that can rub shoulders with their peers anywhere in the world, and we are very ready for national assignments,” he said.
On diversifying the nation’s economy, he said Nigeria must move from mere slogans to putting into practice its diversification drive.
In a recent chat with EnergyDay on both challenges, Chief Executive Officer of Lubeservices Associates, a consultant to independent marketers in the country’s downstream sector, suggested a phased deregulation of the downstream industry as a means of ending the current petrol subsidy regime.
Engr. Sote stated that, over the years, he had advocated for a “special trust fund” to partly finance some specific import needs of the downstream industry, rather than the subsidizing of fuel from government coffers.
Quoting from one of his books titled: “Beyond the Crude Oil and Gas Reserves,” Engr. Sote said, “The present operational environment of the downstream petroleum business is corrupt and polluted.”
“It is enmeshed in a complex political terrain of escalating dimensions that can lead only to an exponential decline in the overall performance and success of the oil companies if it is not sanitized now.”
“And in the words of Daniel Yergin in his book, The Prize: “Certainly one of the lessons of the history of oil is to expect the unexpected, the surprise that becomes perfectly obvious only after the fact.”
According to him, part of the fund should be used to mitigate the effect of subsidy removal by providing certain social amenities, infrastructures, and relief packages to Nigerians, especially in the areas of mass transportation, road maintenance, tax relief, health, agriculture, education, and mass housing programs.
Engr. Sote lamented the fact that, despite several suggestions and documented proposals made to the government by well meaning Nigerians, the country’s oil and gas industry is still struggling to overcome the age-old challenges, identifying “politics and entitlement syndrome” as factors responsible.
Moreover, over the decades, all professional suggestions and globally- tested advice given by the local and international refinery experts with proven track records, developmental economists, investment analysts, and management gurus in their well-documented position papers usually ended up in the dustbins of history amidst the cesspits of corruption and confusion, “he said.
If the existing, uncompleted modular refineries within Nigeria meant to produce diesel, including Watersmith Modular Refinery and Greenville Refinery, amongst others, can be given the needed support by the government, Nigeria’s dependence on AGO importation is likely to fall, overtime.
Beside diesel production, the commencement of operations by these local refiners will help to increase the available quantity of kerosene, Naptha and related petroleum products.