…and end petrol queues immediately

FOR decades, Nigerians have faced the frustration of petrol queues, a recurring symbol of the inefficiency, corruption, and the larger systemic failures within the country’s energy sector. While the recent policy shifts, especially the push for deregulation, offer a ray of hope, the journey toward eliminating petrol queues and ensuring stable energy access for all Nigerians is far from complete. Therefore, the authorities must muster the necessary will to escalate the local refining of crude for a sustainable energy supply.

Nigeria should not ordinarily be experiencing fuel shortages. It is the largest crude exporter in Africa. However, its four public refineries, with a nameplate of 445,000 barrels per day and under the control of the Nigerian National Petroleum Company Limited, have been making losses for decades.

The sensible option is to sell them instead of the perennial rehabilitation that has gulped billions of dollars. The outcome of the neglect of domestic refining is cyclical fuel shortages, which Nigeria has been experiencing since 1995.

For several weeks, long petrol queues have defined the cities. Citizens are spending long man-hours at petrol stations. The marketers have taken advantage of the scarcity, dispensing petrol at above the official prices. Despite assurances from the authorities, the scarcity has persisted since May, worsening the economic situation in the country.

In many states, petrol is sold between N800 and N980 per litre. In some places, it sells above N1,000/l. Despite the high price, there are still lengthy queues. The agony is hurting citizens.

The silence from the government is unacceptable. The NNPC initially blamed transhipment. It accused citizens of panic buying, saying it had 1.5 billion litres in stock. That is far from the truth because the scarcity persists.

At the weekend, the government accused marketers of hoarding. This is just to cover up its inefficiency. It is difficult to hoard a good in adequate supply.

Fuel queues in Nigeria result from a complex interplay of supply chain inefficiencies, corruption, policy inconsistencies, and infrastructure decay. Historically, the government’s approach to managing the oil sector has been marred by contradictions, particularly in the subsidy regime. While the subsidy was intended to make fuel affordable, it created opportunities for rent-seeking and corruption, leading to artificial scarcity and prolonged queues.

Additionally, Nigeria’s reliance on imported refined petroleum products has exacerbated the problem. The country’s refineries, operating far below capacity due to neglect and mismanagement, have forced Nigeria to depend heavily on imports, making the domestic market vulnerable to global oil price fluctuations and forex challenges.

The removal of the petrol subsidy signals a shift towards market-driven pricing, which could incentivise private investment in the downstream sector. However, this policy has not been accompanied by robust regulatory oversight to prevent exploitation by market players and ensure that the benefits of deregulation, such as improved supply and infrastructure development, are realised.

Deregulation is not a silver bullet. Therefore, the government must ensure that the transition to a fully deregulated market is smooth and that social safety nets are in place to cushion the impact on the most vulnerable populations.

One of the most critical steps towards ending fuel queues is the rehabilitation and expansion of Nigeria’s refining capacity. The 650,000 Dangote Refinery offers a promising solution. However, relying on a single mega-refinery is not enough. The government must privatise the state-owned refineries and encourage the establishment of modular refineries across the country.

Ending fuel queues in Nigeria is not merely about policy adjustments; it requires a comprehensive approach that addresses the underlying systemic issues in the energy sector. While recent policy shifts offer hope, their success depends on effective implementation, infrastructure development, and a commitment to transparency.

Ultimately, Nigeria should sell its refineries to enable competition in the downstream.