Is subsidy truly gone? Fuel crisis persists as black marketers exploit Nigerians

Nigerians have started questioning the reality of fuel subsidy removal due to the lingering petrol crisis that has persistently subjected citizens to hardship and exploitation in the hands of street fuel peddlers, better known as black marketers.

After President Bola Tinubu announced the removal of fuel subsidy in his inauguration speech on May 29, 2023, his administration made promises to cushion the adverse effects of the policy on Nigerians as petrol prices rose immediately from ₦185/litre in Lagos to over ₦600/litre in one week.

The situation sparked a sudden fuel scarcity and frustrating queues at fuel stations triggered by panic buying.

The idea of fuel subsidy removal was sold to Nigerians as a silver bullet to the age-long fuel supply crisis in the country. The prominent narrative about the policy is anchored on the sentiment that the scheme benefits a few oil magnates who buy petrol at a subsidised rate from Nigeria and sell the product abroad.

It is against this background that Nigerians subscribed to the initiative without the pushback that the administration of former President Goodluck Jonathan witnessed when it made the same move in 2012.

Despite the biting economic hardship that followed President Tinubu’s policies, Nigerians continued to buy petrol at over ₦600/litre at fuel stations with the hope that the price would come down someday.

Fuel subsidy controversy

In October 2023, during another fuel scarcity episode, the Petroleum and Natural Gas Senior Staff Association of Nigeria disclosed that fuel subsidy had been reintroduced through the back door but the Nigerian National Petroleum Company Limited (NNPCL) denied the claim.

The Group Chief Executive Officer, NNPCL, Mele Kyari, while explaining the reason for the fuel crisis, re-echoed Tinubu’s position that fuel subsidy is truly gone.

“No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market, and we understand why the marketers are unable to import. We hope that they do it very quickly and these are some of the interventions the government is doing. There is no subsidy,” Kyari said.

But the Independent Petroleum Marketers Association of Nigeria disagreed with Kyari, accusing him of ‘peddling lies’ about PMS subsidy.

John Kekeocha, the national secretary of the association, explained that the current pump price should be around ₦1,000 because of the exchange rate.

He said the government has been paying billions of naira on PMS subsidy but resorted to twisting facts about it because of the fear of backlash from Nigerians should petrol price rise to ₦1,000 per litre.

He said, “This is just simple arithmetic, if you removed the subsidy when a dollar was about ₦700 and today the dollar is more than ₦1,000, and you are still supplying and giving products at almost the same rate, what is the magic? They are subsidising products as we speak.

“They are spending billions of naira to subsidise products, and because they know that this country may go on fire if Nigerians buy products at about ₦1,000/litre, they keep twisting facts.”

According to the Major Energies Marketers Association of Nigeria, the landing cost of PMS as of July 16, 2024, was ₦1,117/litre.

This suggests the official pump price of PMS across the country should be over ₦1,000 if the price is not subsidised.

However, every time Nigerians are faced with a fuel crisis, the situation usually leaves room for boys on the streets to turn to black marketers, selling petrol to people who want it in their vehicles to move around or power their generators.

The lingering petrol crisis in Nigeria often leaves Nigerians at the mercy of black marketers who not only sell the product at exorbitant prices but also mix petrol with other liquid that damages vehicle engines.

In a bid to curb this, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) recently ordered fuel stations to stop selling in kegs, citing safety. The corporation threatened to withdraw the licence of any fuel stations that attend to fuel peddlers.

While this directive gives vehicle owners access to petrol, Nigerians, such as artisans who need the product for their trades are left with no choice but to patronise the Shylock on the streets who regardless of the NNPC directive would get the product by any possible means.

Subsidy or shortfall?

Meanwhile, after almost a year of denying the return of fuel subsidy, the NNPC has eventually clarified that the government has been making payments to keep the official price of petrol at ₦617/litre at fuel stations operated by the NNPC. But these payments are not called subsidy.

While clarifying this on Monday, July 19, 2024, the Chief Financial Officer of the NNPC, Alhaji Umar Ajiya, said the NNPC has not paid any oil marketer a dime in the name of subsidy in the last eight months.

He, however, disclosed that the government has been paying for what he called a ‘shortfall.’

“No marketer has received any money from us by way of subsidy.

“What has been happening is that we have been importing PMS, which has been landing at a certain cost price and the government tells us to sell it at half price.

“So the difference between the landing price and that half price is a shortfall," Ajiya said.

While the petrol crisis lingers, Nigerians look forward to President Tinubu’s promise to revive the local refineries and address the country’s dependence on fuel importation, which is believed to be one of the causes of the persistent fuel crisis in Nigeria.