Despite being the largest producer of crude oil in Africa, scarcity of petroleum products is an incessant problem in Nigeria.
Usually, fuel scarcity happens prior to a hike in fuel prices. As a result, we will be taking a look at fuel scarcity in the light of the history of fuel price hikes.
One of the most notable fuel scarcity events happened in 1996. At this time, the country was being ruled by General Sani Abacha.
It was at this time the situation began to really worsen as the country’s refineries were no longer functioning and the only option was to export crude oil to foreign refineries.
Interestingly, it didn’t seem like the government at that time had the will power to turn things around as there were allegations at that time that the Abacha-led government had awarded an Indian fishing company the contract for the turn-around-maintenance (TAM) of the Warri refinery.
The abandonment of the local refineries led to a new era of importers that held the nation to its whims and caprices.
Over the last, 50 years, fuel scarcity has often happened prior to a hike in fuel price.
Here, we take a quick look at the history of fuel price increase from the Gowon adminstration till date.
General Yakubu Gowon (1966 – 1975)
During Gowon’s tenure as Head of State, he was said to have increased the price of petrol from 6k to 8.45k.
General Murtala Mohammed (1975 – 1976)
Murtala Muhammed increased the pump price of petrol from 8.45k to 9k
Major General Olusegun Obasanjo (1976 – 1979)
Obasanjo increased the pump price from 9k to 15.3k during his time as President.
Alhaji Shehu Shagari (1979 – 1983)
The civilian President increased the pump price of petrol by over 30% from 15.3k to 20k
General Ibrahim Babangida (1985 – 1993)
The pump price remained the same during Buhari time as President, but when Babangida assumed power, he increased the pump price a total of four times
- 20k to 39.5k
- 5k to 42k
- 42k to 60k (Private Vehicles)
- 60k to 70k
Ernest Shonekan (1993)
During Ernest Shonekan’s brief tenure, he increased the price of petrol by over 700% from 70k to N5
General Sanni Abacha (1993 – 1998)
Abacha was in power for 5 years and his tenure was accompanied with fuel scarcity. Initially, he reduced the petrol prices but later increased it before reducing it again.
- N5 to N25k
- N25k to N15
- N15 to N11
General Abdulsalami Abubukar (1998 – 1999)
Abubukar was the interim President between 1998 and 1999 and his tenure saw some movements in terms of fuel price.
N11 to N25
N25 to N20
Olusegun Obasanjo (1999 – 2007)
During Obasanjo’s tenure as President, the price of petrol only saw a single change but when he returned in 1999, the price experienced several changes over a period of eight years.
- N20 to N30
- N30 to N22
- N22 to N26
- N26 to N42
- N42 to N50
- N50 to N65
- N65 to N75
President Umaru Musa Yaradua (2007 – 2010)
Yar’Adua was able to drop the price of petrol from N75 to N65 during his tenure as President
President Goodluck Jonathan (2010 – 2015)
The pump price changed three times during the tenure of Goodluck Jonathan
- N65 – N141
- N141 – N97
- N97 – N87
President Muhammed Buhari (2015 till date)
Despite his campaign promise to reduce the price of fuel, President Buhari increased the price of petrol from N87 to N143 in 2016
The most recent fuel scarcity happened in the last quarter of 2017. The scarcity was due to rumours that the government was planning to increase the price of fuel and this led to spate of panic buying.
During this period, the Independent Petroleum Marketers Association of Nigeria, IPMAN, also announced plans to withdraw their services which further worsened the situation.
As a result of the scarcity and panic buying, fuel was sold at a rate of N150 or more instead of N143.
Often times, it has been observed that the only time fuel prices drop is when an election is close by. As a result, reduction in the pump price of petrol has only being used as a tool to score political point.
At some point, the Nigerian National Petroleum Company attempted to take up the sole duty of importing the refined products into the country but this decision couldn’t work as the agency didn’t have the capacity for this enormous task.
Here’s an explanation of why this isn’t possible. Currently the Depots and Petroleum Products Marketers Association (DAPPMA) members import about 65% of the nation’s total fuel consumption, the Major Oil Marketers Association of Nigeria (MOMAN) imports 15% while PPMC/NNPC imports the balance of 20%.
This means the NNPC would need to increase its quota from 20% to 100% which it doesn’t have the capacity to do.
Additionally, out of nearly 130 fuel depots in the country, IPMAN, MOMAN and NNPC own them in the following ratio of 83:24:22 respectively. This means the NNPC would need to borrow depots from IPMAN and MOMAN in order to successfully import solely. Obviously, this will come with several constraints
If the NNPC manages to scale this hurdle, there is also the distribution problem.
Currently, there are over 26,700 filling stations nationwide, with 2,453 stations belonging to the Major Oil Marketers Association of Nigeria (MOMAN), comprising Mobil Oil, Total, Oando, Conoil, Forte Oil and MRS while NNPC has only 37 mega stations located only in the capital cities in the 36 states of the federation and the federal capital territory. And the Independent Petroleum Marketers Association of Nigeria control over 24,226 outlets located in other parts of the country.
Unfortunately, the subsidy issue has come with conflict over the quantity of petrol imported daily. The marketers claim that it is between 45 and 60 million litres per day but the FG estimates this value at 35 to 40 million litres per day.
The government has tried to avoid the subsidy problem by fixing the local refineries but the licences given to private investors is yet to yield any result. However, Nigerian billionaire, Aliko Dangote has vowed to fix this problem and he is currently building a refinery which is expected to be completed by December 2019.
Dangote refinery is said to have a capacity to refine 650,000 barrels of crude oil which is a quarter of the country’s daily output of 2.5 million barrels.
Also, the refinery is expected to save Nigeria $12 billion annual import substitution, create over 150,000 jobs as well as crash prices of petroleum products.