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Queues of up to eight hours at gas pumps have become commonplace for Nigerians hoping to stock up on fuel, since oil marketers stopped supplying the country just over a month ago. However, the strike is set to end Tuesday after the Major Oil Marketers Association of Nigeria and the national oil company NNPC reached an agreement with the government.
Despite Nigeria being Africa’s biggest oil producer, this is not the first time residents have felt an oil crunch due to disruption of imports. Nigeria’s lack of functioning refineries – left in disrepair, inevitably slipping down international bench-marking standards – means the country imports almost all of its gas. According to data from the Central Bank of Nigeria, the country’s four refineries operated at around 31 percent of their capacity in 2012.
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Oil dominant Nigeria's fuel shortage appears to have gotten very serious and is already crippling its economy. pic.twitter.com/YkOxkNyDy5
— Maps Maponyane (@MapsMaponyane)
May 26, 2015
In February 2015, the NNPC’s executive director, Ian Udoh, said three refineries would be fixed for maximum capacity utilization over a period of 18 months. Until then, however, Nigeria is relying on exporting crude and importing the final product. According to marketers’ association Chairman Sunny Nkepe, it is currently more profitable to import the product.
At the heart of the problem is the subsidy program. The government subsidizes gas to make it affordable, but the companies it imports from have been holding back supplies, arguing the Nigerian government owes them subsidy back payments of US$1 billion.
Nigeria’s government denies this. Finance Minister Ngozi Okonjo-Iweala said, “I want to emphasize that contrary to some unfounded speculations, the queues are not caused by payment issues.”
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The country’s outgoing president, Goodluck Jonathan, who is handing over to President-elect Muhammadu Buhari on Friday, removed the subsidy in 2012, claiming it was not sustainable. The move caused massive unrest, with Nigerians across the country protesting the taking away of the most significant state benefit.
However, it’s not only the population which benefit from the subsidy program; it has also been at the center of scams and scandals. In 2011, a discrepancy of more than US$4 billion a year between the amount of fuel subsidized and the actual consumption was registered, prompting allegations of massive corruption.
Some believe the scam is still ongoing and that marketers claim they import a lot more fuel than they actually do, in order to demand payment for more than they should be owed in subsidies.
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Now the strike is officially over, supplies should be normalized within 24 hours, but the chronic fuel shortages of the past month has impacted on people and companies throughout the country. Phone companies and banks have had to suspend their operations because their private generators ran out of fuel, while airlines could not access fuel for their planes, causing long delays and cancellations.
Transnationals control the Niger Delta, with 95 percent of all crude oil output being extracted by joint ventures between the Nigerian federal government and foreign multi-national corporations. Only six companies operate in Nigeria, including Shell, Mobil, Chevron and Total.
Muhammadu Buhari, who seized power in a military coup in 1983, was elected in March and will assume office May 29, 2015.
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