Fuel Scarcity Returns To Lagos Amid Increased Pump Price

Fuel scarcity has made a troubling return to Lagos and its surroundings, as numerous oil marketers have closed their outlets, leaving motorists and consumers in a lurch. Last week, a similar issue was reported in Abuja, attributed by oil marketers to poor road conditions and the soaring cost of diesel for distribution. However, recent observations over the weekend have revealed that both independent and major oil marketers have halted operations, leaving the responsibility of serving customers in most parts of Lagos to NNPC Limited, the only remaining importer of the product. This scarcity has persisted despite fuel deregulation, as other operators have struggled to import petrol due to market instability and a lack of foreign exchange.  The informal exchange rate has reached over N1,000 per dollar, compounding the challenges faced by these operators. Chinedu Okoronkwo, the President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), has indicated that measures are being taken to address this crisis.  He stated, “Stakeholders have been meeting, and measures have been taken to enable oil marketers to access foreign exchange at a rate that will not disrupt the current price of the product.” Meanwhile, in Abuja, most major marketers that are still operational have raised their pump prices from N615 per liter to N625 per litre, adding to the woes of already burdened consumers.

Rising Oil Prices Good For FG, Bad For Nigerians, Says Rewane

Goldman Sachs has predicted oil price will likely rise to $100 again, citing lower production output from the Organization of Petroleum Exporting Countries (OPEC), amongst others. Chief Executive Officer of Financial Derivatives Company (FDC) Limited, Bismarck Rewane, says it will only increase revenue to governments but will not benefit Nigerians. “Globally, oil prices trade at $95/b and are projected to hit $100/b by year-end due to supply shortages. While government revenue, Federal Account Allocation Committee (FAAC) could increase in naira terms, Nigeria’s reliance on imported energy products (LPG, diesel, petrol and kerosene) amid a falling naira means higher food and transport costs, exacerbating inflationary pressures”, said Rewane in a statement Sunday. He said, these will be major considerations for the MPC at its next meeting, whenever that will be. Nonetheless, we expect the MPC to remain hawkish. Rewane in its FDC Prism Sunday however said, some form of looking inward could solve Nigeria’s economic woes. “Viable options would be improving the value addition of top agricultural traded products like cashew and cocoa, as well as mineral resources like steel. More importantly, Nigeria needs to show its political will, improve access, and encourage local businesses, particularly SMEs, to participate in the AfCFTA by removing non-tariff barriers, he said. Also meanwhile, oil and gas companies keep reporting meaty profits and investors are rediscovering their love of hydrocarbons. At the recent World Petroleum Congress (WPC) in Calgary, oil executives and government officials both warned against the continued push to discourage investment in new hydrocarbon production. “There seems to be wishful thinking that we’re going to flip a switch from where we’re at today to where it will be tomorrow,” Exxon’s chief executive said during the event. “No matter where demand gets to, if we don’t maintain some level of investment industry, you end up running shorter supply which leads to higher prices,” Darren Woods also said. This is exactly what we are currently witnessing in Europe and the United States. Because of the transition push, oil producers are being extra cautious with production growth. Also, they are prioritizing shareholder returns to keep shareholders on, so it pays for them to be cautious. In Europe, the supermajors are being squeezed by windfall profit taxes, activist pressure, and increasingly restrictive legislation, so they are turning elsewhere. Shell is tapping billions of potential barrels in Namibia, and Total is considering a $9billion commitment to oil exploration in Suriname. Meanwhile, Nigeria’s oil output could increase to 2.1 million barrels per day by December 2024 after the country secured $13.5 billion in investment pledges over the next twelve months from oil majors. The companies agreed to invest a total of $55.2 billion by 2030 – including the $13.5 billion over the next twelve months – to lift crude production, according to a statement from the president’s office.Nigeria’s oil output stood at 1.18 million bpd in August 2023, according to the Organisation of Petroleum Exporting Countries (OPEC), meaning production would nearly double by the end of next year. Nigeria is the top oil producer in Africa but large-scale oil theft has over the years cost the country billions of dollars, while dwindling investment in the sector has also curtailed output.The losses from theft and a lack of new projects have reduced oil exports sharply, eroding foreign currency earnings in Africa’s biggest economy.