MEMAN Reveals Root Causes for Persistent Fuel Scarcity in Nigeria
By Ndubuisi Micheal Obineme
…says Nigerian fuel supply chain management and logistics are very ‘Fragile’.
…applauds the government and industry stakeholders in working closely to address issues around the recent fuel scarcity experienced across the country.
…clarifies the role of NNPC Limited in petrol trading and supply, says the Company isn’t a monopoly entity entitled as a sole supplier of petroleum products in Nigeria.
…explains the cost incurred on logistics in buying and selling petroleum products influences the price at filling stations.
The Major Energies Marketers Association of Nigeria (MEMAN) has revealed the root causes for persistent fuel scarcity experienced in Nigeria, resulting in long queues at many filling stations and sharp practices by some petroleum marketers who are exploiting the present situation to make more money.
The Managing Director of the Nigerian National Petroleum Company Limited (NNPCL) Retail Services and the Chairman of the MEMAN Association, Huub Stockman, and Clement Isong, Executive Secretary & CEO of MEMAN, both spoke in an exclusive interview with TVC News recently, covered by The Energy Republic, analyzed the current challenges around the supply chain management and logistics for fuel supply in Nigeria and how MEMAN companies are working closely in resolving the issues.
The recent fuel scarcity across the country has triggered several negative reactions from the public saying that there might not be enough PMS products in Nigeria.
However, MEMAN has stated clearly that there is no shortage of petroleum products in Nigeria, noting that over 300 million liters of PMS are being loaded from various depots in Apapa and other locations in Lagos to ensure filling stations are supplied with adequate petroleum products.
Speaking about the root causes of fuel scarcity in Nigeria, Stockman revealed that the Nigerian supply chain management and logistics for fuel supply are very fragile and complicated, adding that only a small incident will go wrong at the terminal that will cause a disruption in the entire value chain for fuel supply across the country.
He said, “I have a typical example of that. I did a run around at the Escravos terminal a couple of days ago, as we speak, there are five empty vessels in the Warri area stocked and cannot get out of the Escravos channel.
“There are two vessels loaded with products waiting to get into the Escravos channel. This has already been lingering for a couple of days. It was resolved yesterday, but that doesn’t mean that the vessel’s immunity is gone.
“Basically, we got seven vessels carrying close to 150 million liters of PMS that can either not load again, deliver the cargo or even bring the next cargo in. This shows how complex at times the supply chain is in Nigeria.
So far, Stockmann said MEMAN member companies have loaded over 700 trucks for distribution to other filling stations.
“We are making sure state by state, we eradicate the long queues. In Lagos and Port Harcourt including the Delta area, our members are loading PMS products that will be distributed to other states.”
More so, there has been serious concern and reactions from the members of the public saying that the fuel scarcity shows that NNPC Limited is struggling to meet the energy demand in the country, resulting to high price of PMS products.
Responding to these allegations during the TVC News interview, Stockmann said the price of PMS has been deregulated in Nigeria, resulting in different prices at various filling stations in the country.
“At NNPC Limited Retail Outlets, we aren’t changing our price.
“We have no interest in becoming a monopolist in the market. By heritage, we are a big player but we are open to competition.
“Government can intervene. I will use the example of what happened between Russia and Ukraine war. Gas prices went through the roof. To protect consumers, many governments intervened in the gas price to make sure that there was a bit of a cushion.
“It’s the full right for the government to intervene and decide what can be done,” Stockmann said.
On the other hand, he disclosed that the PIA has made provisions for situations like this and the government has provided some intervention, but they don’t last forever.
He said the government is also trying to solve several economic issues and hopefully they will fully provide the much-needed enabling environment for petroleum products trading and supply soon.
Adding to this, Clement Isong, Executive Secretary & CEO of MEMAN confirmed there is a government intervention on prices of PMS products.
Isong said that the price of PMS has been deregulated by the government since 2023 and petroleum marketers buy the products at the deregulated price.
However, he explained that the cost of PMS is influenced by the cost incurred on logistics in buying and selling petroleum products.
According to him, “There is a cost for shipping from the vessels into the depot. From the depot, there are charges in dollars. NIMASA charges in dollars.
‘These dollars wherever you get them influence the price of PMS. From the depot to the filling station, there is also a cost.
“Again, how you manage the transportation, there is a cost for transportation of petroleum products.
“So, the prices from filling stations-to-filling stations are different. but, NNPCL has been able to keep their prices the same”.
Speaking on MEMAN’s response to resolving the fuel scarcity issues, Isong said MEMAN established a hub in Apapa in collaboration with its member companies.
He noted the Apapa hub is an excellent platform that allows its members to share logistics and depot facilities when the need arises.
“The advantage that we have is that all our members have depot facilities in Apapa. We have learned to work together for the efficiency of the Apapa hub.
“So when we have scarcity like this, we share logistics and products. We do products swap. If I run dry in my depot, I can go and pick products from another MEMAN company depot. Later when I have products, I will give back the products I took.
“This has enabled us to keep all our stations working. We have our stations in all the urban areas in Nigeria. If we can keep about 3,000 stations working, we will be able to get our products out of our depot efficiently.
“Our objective is to remove the long queues at the filling station,” he noted.
Speaking further, Isong said the Petroleum Industry Act (PIA) has designated NNPC Limited as the supplier of last resort, which simply means NNPCL shall import and supply petroleum products under regulated conditions, to customers who have not been able to contract a supplier due to some challenges in the market.
“If we are struggling in managing our exchange rate, and the challenge is nobody else can import, NNPC Limited is duty bond to import.
“The PIA also said that NNPCL must be compensated by the Federal Government of Nigeria whenever it assumes that role. This will last temporarily until we are able to manage our exchange rate efficiently.
“NNPCL by law must guarantee energy security and the government must pay the Company for it according to the PIA. It is envisaged by the PIA and not an ideal situation,” Isong explained.
