NNPC chief, Kyari blames rising cost of transferring vessels, forex scarcity for Nigeria’s fuel crisis
By Onome Amuge
The lingering struggle for fuel availability and the hike in the price of the commodity in Nigeria is as a result of the rising cost of transferring vessels, which has increased from $21 in early January to about $80 in some locations in the country.
Mele Kyari, the Group chief executive officer of Nigerian National Petroleum Company (NNPC) Limited, made the disclosure in a recent interview with Channels TV monitored by Business A.M.
“Our compensation template under the price regime we are running today did not see that coming. So, somebody has to pay for this and that adjustment must take place,” Kyari explained.
The NNPC boss further pointed out that forex scarcity, which he described as a secondary issue, has also contributed to the fuel crisis, considering equipment for depots and trucks’ management are imported.
“For instance, every depot buys equipment and facilities and manages them from materials that they have to buy overseas and you must find FX to buy them. Prices also move without any reference to our local station, So their costs rise while we are not able to adjust for the benefit that they will require from the pricing template for them to recover their total cost,” he explained.
The NNPC shift also highlighted the volatile diesel market as a contributing factor to the difficulty in purchasing fuel across major stations, as the trucks delivering petrol run on diesel.
Even when you take the product out of the depots, you have to put them on trucks.. Our current template is premised on diesel price of around 300 to 400 naira to the litre. Today, because of the shift on the market, a litre of diesel sells close to 900 naira per litre. This is not anticipated because nobody saw it coming.
Kyari noted that a chain of issues such as high number of taxes and levies imposed upon trucks in transit also leads to increase in fuel prices as the marketers are forced to do everything possible to recover their costs.
Kyari also stated that the 2022 flood in the country disrupted the supply chain which in turn prevented stakeholders from transporting the fuel to certain locations in the country.
He explained that the inability to transport the commodity and the increase in arbitrage across the country resulted in redundancy, while oil marketers are taking advantage by transporting the products to areas where the price is higher after the flood subsided.
“There is fuel in the country but it is just in the wrong location. When there is arbitrage, oil market traders will naturally look for where the prices are higher and they will move those products to those locations which can be filling stations, or trucks, waiting to be sold off to people who can buy at N350 per litre,” he said.