Ask Nigeria Header Logo

Fuel scarcity disrupts businesses in Nigeria

Photo of author

By Abraham Adekunle

NNPC, marketers blame logistics, commuters affected by price hike.

A petrol shortage caused by logistical issues is disrupting businesses and frustrating Nigerians. Long lines have formed at gas stations in major cities, with some stations running out of fuel entirely. Commuters are facing longer wait times and higher fares due to increased transportation costs. The situation is particularly difficult for those who rely on their vehicles for work. Uche Adams, a Lagos trader, hasn’t been able to work for two days because he can’t find petrol. In Abuja, barber shop owner Adamu Abdullahi is limited to working only five hours a day due to the shortage.

Petrol prices have also skyrocketed. Private depot owners have increased their prices from ₦630 to ₦720 per litre, and Black Market sellers are charging as much as ₦1,000 per litre – well above the normal price range of ₦600 to ₦800 per litre. The state-owned oil company, NNPC, blames the shortage on disruptions in ship-to-ship transfers of petrol caused by recent thunderstorms. They say bad weather has also impacted loading at ports, truck shipments, and overall supply Logistics. Flooding on transport routes has further complicated the situation, making it difficult to move petrol from coastal areas to inland cities.

Decades of fuel scarcity and the present triggers.

Nigeria’s struggle with shortages is a long-running story. We can attribute the cause to global influences, government actions, and internal hurdles. The oil boom of the 1970s brought not only prosperity to the country but also a dangerous dependence on oil income, laying the groundwork for future economic problems. Declining oil prices in the 1980s and 1990s, coupled with Corruption and mismanagement, led to repeated shortages. The situation was further muddied by the government’s unstable policies on fuel subsidies, causing public anger and economic instability. The recent crisis in Nigeria originated from the government’s decision to scrap fuel subsidies, a longstanding policy intended to keep it affordable for most Nigerians.

While Subsidies eased the burden on consumers, they also placed a strain on government finances and encouraged misuse and Smuggling. The government aimed to redirect these funds towards more productive areas, but the sudden and significant price hike caught many off guard and unprepared. As the oil-reliant Economy faces challenges, volatile global oil prices and domestic issues like foreign exchange shortages make it difficult for importers to secure the dollars needed to buy petrol, also known as premium motor spirit (PMS). The weakening local currency further complicates matters by inflating the cost of imported PMS.

Broken refineries and infrastructure bottlenecks.

Despite being a major oil producer, Nigeria imports a substantial amount of its refined PMS due to its underperforming refineries. The country’s refineries are frequently shut down or operating below capacity due to mismanagement, a lack of maintenance, and aging Infrastructure. This dependence on imports exposes the country to global oil price swings and creates vulnerabilities in its supply chain. Corruption and mismanagement have long plagued Nigeria’s PMS supply chain. Subsidized fuel is often diverted and sold illegally in neighboring countries where prices are higher.

Additionally, a lack of transparency in subsidy administration and PMS distribution fosters inefficiency and a thriving black market, worsening shortages whenever they occur. This scarcity triggers a domino effect, leading to increased transportation costs that inflate the prices of goods and services across the board. This contributes to rising inflation, with the transportation sector being a prime victim. Small and medium-sized businesses, particularly sensitive to fuel price fluctuations, suffer the most, with layoffs and economic slowdown becoming grim realities.

Related Article: Fuel scarcity affects families & businesses

There are two kinds of solutions to this problem. In the short term, the government could bring in extra fuel from other countries, maybe even sell it a bit cheaper for a while to bring prices down. They should also try to fix the system that gets the product around the country and stop any cheating or stealing of fuel. In the long term, Nigeria needs to fix its own refineries so they can make more PMS instead of buying it from others. This means spending money to get the old ones working better, buying newer machines, and having people who know what they’re doing run them. They could also try using cleaner energy sources like sunshine or wind power to rely less on gasoline and diesel.


Disclaimer

The content on AskNigeria.com is given for general information only and does not constitute a professional opinion, and users should seek their own legal/professional advice. There is data available online that lists details, facts and further information not listed in this post, please complete your own investigation into these matters and reach your own conclusion. Images included with this information are not real, they are AI generated and are used for decorative purposes only. Our images are not depicting actual events unless otherwise specified. AskNigeria.com accepts no responsibility for losses from any person acting or refraining from acting as a result of content contained in this website and/or other websites which may be linked to this website.