Nigerians face growing frustration as fuel shortages bite

Nigeria’s major cities are experiencing a worsening fuel crisis, with long queues snaking around petrol stations. The shortage is crippling transportation and businesses, highlighting the state oil company NNPC Ltd.’s difficulties meeting supply obligations.

While President Tinubu’s government opened fuel imports to private firms last year, foreign currency shortages and a government-imposed cap on petrol prices have effectively kept NNPC as the sole importer. The lack of competition is seen as a contributing factor to the current crisis.

Petrol is the lifeblood of Nigeria’s economy, powering cars, generators for homes, and small businesses. This shortage has a cascading effect on the nation, which already faces its highest inflation rate in 28 years.

Price Gouging

Some gas stations with limited fuel are taking advantage, raising petrol prices to as high as N840 per litre, significantly higher than the official NNPC price of N617. Street vendors are even more exploitative, charging as much as N1,000 per litre.

Oil marketers claim NNPC isn’t providing enough fuel for distribution nationwide, blaming “logistical challenges.” NNPC, however, maintains it has enough petrol reserves (over 1.5 billion liters) to last for at least 30 days, and that the queues will disappear within days.

Femi Soneye, NNPC spokesperson said the NNPC had more than 1.5 billion litres of petrol, which was enough to last at least 30 days and that queues would end within days.

“Unfortunately, we experienced a three-day disruption in distribution due to logistical issues, which has since been resolved. However, as you know, overcoming such disruptions typically requires double the amount of time to return to normal operations,” Mr Soneye said, according to Reuters.

Deeper Issues Plague NNPC

Beyond immediate disruptions, NNPC faces deeper problems. The company struggles to settle a $3 billion debt to fuel traders due to a weakening naira and rising global fuel prices, effectively increasing the government subsidy on petrol. NNPC denies owing this money.

Additionally, NNPC reportedly has difficulty securing enough crude oil to swap for refined gasoline. Some of its oil production is tied to existing contracts, limiting the amount available for domestic refining at facilities like the Dangote Refinery.