Fuel scarcity: The three options before Tinubu

There are videos on the internet showing a report of Nigeria’s fuel scarcity from as far back as 1984. It is 2024, and we still have the same news stories filling our newspapers and TV stations. Every time we think we are out of the woods, the forest confronts us.

This time last year, we felt Dangote Refinery was here to save the day, but here we are — a lot of drama, but very little fuel. Three years ago, we thought the Petroleum Industry Act would change the story, but the chorus has remained the same — a lot of talk, but very little act. As we say in Nigerian parlance, “who do us this thing?”

If we get past all that pessimism, we may be able to ask a few questions that help us understand the devil we face and the deep blue sea we may be swimming in. In 2023, when President Bola Tinubu said “subsidy was gone,” we thought we were done with the drowning rent-seeking nature of the subsidy regime. The pump price of Premium Motor Spirit (PMS) jumped above N600 per litre.

About a month later, the Central Bank of Nigeria (CBN) began a dollar-naira discovery journey, that saw the local currency hit N900+ to the dollar in just a few months. At this point, I began to raise the concern that fuel subsidies may be back, but the government denied it and kept up the act till a week ago.

In reality, however, we have all come to realise that there is no difference between six and half a dozen, regardless of what the state oil company says. Subsidy has been in place since 2023, hitting a record N4.2 trillion in the first seven months of 2024.

In September 2024, NNPCL eventually admitted that it was in debt and was facing a threat to sustainable supply. The NNPCL said we are now in a tight corner.

WHY IS NNPCL SUDDENLY ADMITING?

Anytime fuel scarcity shows up in Nigeria, the NNPCL releases multiple statements, saying how many billion litres of petrol it has in store, urging Nigerians to avoid panic buying. But this time around, NNPCL said “financial strain has placed considerable pressure on the Company and poses a threat to the sustainability of fuel supply”.

So why are they admitting to this? Logically, there’s one clear reason: something has to give. It’s a warning for Nigerians to brace up for higher pump prices or for the country to brace up for even more unsustainable subsidy payments. Or worse still, brace up for longer fuel queues as scarcity may bite harder.

Desperate times, desperate measure.

TINUBU’S OPTIONS?

President Tinubu has dug himself into a very difficult hole. Removing subsidies in June 2023 was considered a bold move. But not having the courage to keep it up, by allowing the price of PMS to fluctuate as the market demanded was the undoing of his bold move.

Now, he has lost the subsidy removal battle, lost the inflation battle and is losing the fuel supply war.

His options, from all the cards I see, are very limited. The first option is to increase the pump price of petrol to reflect current realities, and that would be anywhere between N1,100 to N1,400 per litre. Option two is to continue paying subsidies to keep the prices below N800 per litre, which the NNPCL has admitted is unsustainable. Option three is to let the scarcity continue, and let Nigerians buy at a black market price of about N1,300 per litre until a better solution presents itself.

For a president who recently spent millions of dollars purchasing a new jet, telling Nigerians that the country can no longer afford expensive subsidies will not suffice. Increasing the pump price after many months of negotiation with labour for a new minimum wage will lead to another labour battle that the president cannot afford. The final option of letting the scarcity linger is also very expensive for a Tinubu, who is likely to seek a second term in office.

The president’s team promoted him as the genius from Lagos. Now is the time to show some ingenuity and fix the problem with an option that is not apparent to all involved.

You can reach ‘Mayowa on Twitter @OluwamayowaTJ