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Page added on April 5, 2014
Fuel Shortages Dog Africa’s Biggest Oil Producer
The man in the large SUV forces his way to the front of the line at the gas station, ignoring the blaring horns and threats of fisticuffs from drivers who have slept in their cars and waited for more than 12 hours for the scarce fuel.
Raw anger and frayed tempers give way to resignation as the big man wins, waved in by fuel attendants, no doubt expecting a bribe.
Nigeria, despite being Africa’s biggest petroleum producer, has been dogged by a fuel shortage for weeks.
In this West African nation that does not only mean scarce gas to keep cars on the road. It means no diesel to run generators that are the lifeblood of industry in a country where frequent power cuts last hours. It means no kerosene for stoves used to cook meals by tens of millions of poor people.
And drivers in Lagos use more gas than most, burning it up in chaotic traffic jams that can turn a half-hour ride into a four-hour ordeal. Some commute for hours daily from out of state because they cannot afford wildly expensive rents payable a year in advance in the commercial capital that is home to an estimated 18 million people.
“We have no lights (electricity), no decent hospitals, no decent roads. I can’t pay school fees or put enough food on the table. And now I can’t work,” said an exhausted taxi driver and father of five, Bola Ogunlesi, in a line for gas on Lagos’ Ikoyi Island.
There, gas was being sold for up to 300 naira ($1.81) a liter instead of the government-subsidized 95 naira (58 cents).
Nigerians don’t refer to fuel shortages, only fuel “scarcity,” an indicator they are aware that there is no real shortage.
“It’s embarrassing in a country that produces petroleum,” said political analyst Femi Adebayo. “The problem will continue as long as those in the corridors of power continue to give out contracts to their cronies to import fuel at highly subsidized rates.”
Nigeria does have oil refineries — four of them— to turn the crude oil into fuel. But hundreds of millions of dollars allocated over the years to revamp them has disappeared or been ill-spent. The state-owned Nigerian National Petroleum Corp. reported last month that three refineries performed at just 19 percent of their capacity in the first nine months of 2013.
So the country that produces 2.2 million barrels of oil daily imports fuel in often opaque deals.
The International Monetary Fund for years has pressed Nigeria to abandon fuel subsidies that it says encourage corruption and smuggling while doing little to help the poor.
But Nigerians say the subsidy is about the only benefit they get from petroleum resources. Some of the biggest protests ever seen in the country of 170 million erupted in 2012 when President Goodluck Jonathan’s government attempted to scrap the subsidy, doubling prices of fuel overnight. The government was forced to back down, partially restoring the subsidies.
A couple of months later it was revealed that businessmen allied to the government had stolen some $6.8 billion in a fuel subsidy scam where they were paid to import fuel that never arrived. An investigation by a government-appointed commission said fuel subsidies are costing the nation $17 billion a year, not the $8 billion the government claimed. While the government is paying subsidies for 59 million liters of fuel a day, the country consumes only about 35 million liters, the report said.
Two years later, no one has been prosecuted.
In the latest scandal, the Central Bank governor Lamido Sanusi alleged that some $20 billion in oil revenues is missing from state funds. President Jonathan promptly fired Sanusi, though he says he has ordered a forensic audit into the allegedly missing billions.
Just as the shortages appeared to be easing this week, workers at the Independent Petroleum Marketers Association of Nigeria threatened to strike and workers said the 125,000-barrel a day Warri oil refinery has been shut down all week, in part because of rampant oil thefts.
That seemed to presage more misery in Nigeria, where, according to U.N. statistics, 70 percent of people survive on $1 a day.
6 Comments on "Fuel Shortages Dog Africa’s Biggest Oil Producer"
DC on Sat, 5th Apr 2014 6:41 pm
“The International Monetary Fund for years has pressed Nigeria to abandon fuel subsidies that it says encourage corruption and smuggling while doing little to help the poor.”
This is the only important line really in the entire article. Which leads to many interesting questions. Why is the ‘IMF’ running Nigerias economy by proxy, in the first place? But the more direct question is why does the IMF have a problem with fuel subsidies? The IMF in fact, has little problem with fuel subsidy welfare-for western oil corporations and their customers that is, but it has a large problem with 3rd world nations subsidizing fuel for poor peoples use. This cuts into the amount of fuel IMF satraps have available for export to the uS and Europe. Export Land is a bitch-especially now that the uS and britain and others, have liquidated all their own HQ easy to get at fuel @ home. How ‘other’ nations manage ‘their’ resources, oil particularly, has become a matter of keen interest to the IMF-WB amerikan empire.
rockman on Sat, 5th Apr 2014 6:49 pm
DC – “why does the IMF have a problem with fuel subsidies?” Just speculation but given who controls/funds the IMF (some of the biggest fossil fuel consumers on the planet) wouldn’t they be pleased to see other consumers be less able to compete with them for those depleting resources?
rockman on Sat, 5th Apr 2014 7:01 pm
As far as Nigeria increasing it’s supply of refined products if the Chinese can’t cut a deal with the corrupt gov’t no one can IMHO:
The proposed 300,000 barrel per day Greenfield Lekki Refinery located in Lagos may remain in the realm of wishful thinking of the Lagos State government and the stakeholders if the alleged flaws in the new Petroleum Industry Bill (PIB) are not immediately addressed.
Some of the investors told LEADERSHIP Sunday in Lagos that they backed out of the project because of some of the contentious clauses in the PIB before the National Assembly. Investors are worried that the passing of the PIB in its present form will automatically reverse the earlier agreements. The provisions of the PIB cede too much power to the government at the expense of the investors. These facts, coupled with frequent changes in the top management of the NNPC by the federal government, had made sourcing of funds for the $8 billion project difficult.
It was observed that, since the signing of the agreement between the Lagos State government and the NNPC in collaboration with a consortium of Chinese investors known as ChinaState last year for the establishment of the refinery under a public-private partnership (PPP) arrangement, nothing tangible had been done.
If the stakeholders had gone ahead with the construction of the refinery as planned, it would have, in addition to the above crude output, produced 500,000 metric tonnes of liquefied petroleum gas (LPG) per annum.
Under the arrangement, the Chinese are expected to provide 80 per cent of the funds, leaving 20 per cent to the NNPC. The Lagos State government will, in addition to providing the land for the project, construct infrastructure such as road to the site and electricity.
The NNPC management hopes that the Lekki refinery, when completed, will provide over 7,000 jobs for both skilled and unskilled labour.
Brent on Sat, 5th Apr 2014 8:51 pm
I thought that Africa was going to be the oil growth area in the future. But it is looking like Angola, Libya and Algeria are all already seeing the end of their growth.
Davy, Hermann, MO on Sun, 6th Apr 2014 1:16 pm
Rock I like when you chastise the PPI’s on this site.
Nigeria is an example of overshoot to carrying capacity in the highest sense. Lagos is a mega slum and a place no one will want to be is a global fail. This country divided by religions. It is cursed by a particular African style corruption. They are cursed with the problems of a 3rd world country with oil. Their only significant export earner is oil. They have ruined a very great ecosystem in the delta where much of their oil comes from. The country is a mess and is a knife edge away from collapse. It will be interesting to watch what the future brings for this country.
bobinget on Sun, 6th Apr 2014 4:07 pm
What he said. (Davy)
I can’t think of any country (except the US) where over six billion remains unaccounted for and government survives . “Good Luck” indeed.
Those ‘fuel subsidies’ NEVER reached either poor or middle class, such as it was.
As for fuel shortages. Nigerians in the bush were stealing from pipelines, refining light oil in
hundreds of rough so called ‘tea pot’ set-ups.
Once oil companies shut off these pipelines, why not as almost nothing was being delivered anyway, the pop and pop teapots went out of business. Hence, fuel shortages.