Category Archives: Fuel

Zimbabwe borrows its way out of fuel crisis

Crippling petrol shortages have prompted Zimbabwe’s central bank to release over $40m (£31m) for the commodity, it says.

Petrol queues had stretched for several kilometres at some stations before fuel ran out.

Food prices have risen and essential goods are in short supply because of a foreign currency shortage. A $500m credit line will also be used to import fuel, medicines and wheat, as well as soya beans to address a shortage of cooking oil, authorities say.

Some see this as a sticking plaster. The bigger problem – Zimbabwe’s foreign currency shortage – can only be resolved when the country increases its exports.


Fuel Scarcity ‘We won’t import fuel unless CBN provides forex,’ Oil marketers tell FG


The marketers said except the CBN provides foreign exchange to import fuel, the recent subsidy payment they received from the government will remain in their naira accounts.

Oil marketers on Friday, May 20, lamented that they are unable to import fuel due to the unavailability of foreign exchange.
The marketers, under the umbrella of the Depot and Petroleum Products Marketers Association of Nigeria (DPPMAN), are appealing to the Federal Government to assist them in making foreign exchange available.
They made the plea during a meeting at the headquarters of the Ministry of Finance.
The meeting was chaired by the Minister of Finance, Kemi Adeosun, and attended by Chief Executive Officers of 46 major oil companies in the country.
The agenda was to discuss salient issues affecting the downstream sector of the petroleum industry.
Chairman of DAPPMAN, Dapo Abiodun, told the minister that members of the association finding it difficult to convert some of the naira payments made by the government to dollars.
He said their inability to convert these payments from the Federal Government from naira to dollar is making it almost impossible for them to meet their obligations to their foreign partners.
READ: Forex assistance to oil marketers will end fuel scarcity – NUPENG »
He said while the oil marketers will continue to do their best in importing petroleum products into the country, the unavailability of foreign exchange might make it challenging to achieve such objective.
The Federal Government this week announced that it has paid the oil marketers N48.2 billion » minus value added tax as the arrears of outstanding 2015 subsidy claims.
According to Adeosun, the payment is to enable the marketers import petroleum products and meet up their other financial needs.
Abiodun however said except the Central Bank of Nigeria (CBN) provides foreign exchange to them, the payment will remain in their naira accounts.
He said: “We want to thank you for the recent payment of about N42 billion but we want to emphasise the fact that this naira payment will continue to sit in our banks.
“We look forward to dialoguing with you as to how you can help us expedite the sourcing of foreign exchange to liquidate our exposures to our foreign bankers that we have line of credit with.
“We are very worried about going into a new dynamics in which marketers are now going to be sourcing forex at the rate that they can find, which we have approximated to around N285 to a dollar.
“We believe that it is a quick fix solution to all the epileptic supply of petroleum products in the county.
“However, we still have this naira sitting in our account from previous transactions and we are worried that if anything happens to the rate of exchange officially, we are going to be caught in between.
“We do not want to come back to you to ask for foreign exchange differentials which issue we still have pending from previous transactions.”
READ: Fuel Price Hike – ‘Buhari had no choice,’ VP Osinbajo says »
Adeosun said the recent subsidy payment released to the oil marketers is one of the liabilities inherited from the
Goodluck Jonathan administration.
While expressing optimism that the reforms currently being implemented in the oil sector would restore confidence in the market, she said assured that government will continue to ensure the availability of petroleum products in the county.
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New fuel supply and pricing regime: President Buhari had no choice- VP Osinbajo


Vice President Yemi Osinbajo, SAN, asserted yesterday at a public book presentation event in Abuja “If there is one person in Nigeria that believes that petroleum prices should not go up by one Naira, it is President Buhari,”.
Explaining the difficult decision announced last week by the federal government, Prof. Osinbajo said the President simply had no other option. Although the President did not want the fuel price to go up, the Vice President said “he is left with no choice. What can we do if we don’t have foreign currency, we have to import fuel.”
While observing the petroleum products are being imported today into the country, he asserted that even “if we repair our refineries today, we would still be able to refine 40% of our petroleum, so we still need to import.”
Prof Osinbajo then raised a rhetorical query: “in the absence of foreign exchange and you have to import your refined petroleum, what are you left with?
The Vice President who spoke at the public presentation of Anatomy of Corruption in Nigeria: Issues, Challenges & Solutions, a collection of essays edited by Yusuf O. Ali, SAN, asserted that “a lot of the problems associated with the refineries are corruption related.”
He also attended the public presentation of Prof. Ladipo Adamolekun, who just published his autobiography, I Remember.
According to the VP, corruption “explains why many States are owing salaries and continue to owe salaries.”
Furthermore he noted that “when we look at corruption and its deleterious consequences, we must relate it directly to what we are experiencing at this time.”
For example, he said “most of the States, since February 2016, many have been owing, some up to 6 months. When we came into office we tried to settle many of those debts but the Federation Account is lower and we are unable to find the resources to shore up the Federation Account.”
Driving home the point about the consequences of corruption, the Vice President said “When you consider that today, Nigeria’s reserves stands at about $27billion and we are investigating $15billion from one sector alone. That is over half of the entire reserves of the country.
“We are investigating cases which shows that over $15billion was lost in one type of contracts alone. We are not talking of oil contracts, we are talking of security related contracts alone. We have not talked at all about oil contracts, several billions.
“How we dimension the problem must be different. We can not look at it the same way as if it is just petty stealing. This is not just stealing the resource of the country, it is stealing the future as well.
“Let me just state one clear example. All through the period when Nigeria was earning over 100 – 115 dollars in proceeds of oil for a period of almost 5 years, the external reserves of Nigeria remained much the same. It did not (significantly) increase at all despite the very high earnings.
“And that is why we have the situation that we find ourselves today. It is the external reserves that a country resorts to as a last resort in protecting its currency.”
Doing a quick international comparative analysis using another oil-producing country, the VP said :
“when countries were experiencing these high prices, some countries were putting money aside, Saudi Arabia saved over $700billion,-(as at last year) so when their currency began to suffer, of course they were able to shore up their currency with their reserves.”
In the case of Nigeria however, Prof Osinbajo lamented that “we are unable to do so. And the reason is because the reserves have been depleted. It is the same reason why it is difficult to do very very many other things that we should be doing as a nation.”
He then declared that corruption poses an existential threat to the country.
“I want to just very quickly say that corruption has no label. It is not just a social evil, it is an existential threat to our country. There is no doubt at all that this is unlike other countries, (where) people say that there is corruption everywhere, which is true.
“But I think the one distinguishing feature for Nigeria and for many other countries like ours is that it is a threat that directly affects the lives and livelihoods of everyone.
“It is not just an evil, it is not just an immorality, it is an existential threat because it could truly destroy lives and it has destroyed many many lives and has continued to destroy the Nigerian economy.”
Prof. Osinbajo then declared that “unless there is a determined effort to fight corruption at all levels, unless that effort is determined, unless we have the political, the judicial, even the religious will, we would find ourselves in a continuous cycle of corruption, economic adversity, more corruption, more economic adversity.”
“As I observed at another event, when you look at those who are accused of corruption in Nigeria, look at any typical case of fraud or corruption, you will never find three Igbo men (by themselves alone) or three Yoruba men or 3 Hausa speaking men, (by themselves alone) NO! You will find federal character, well-represented.
“You find the Yoruba man, you find the Igbo man, you find the Hausa man, the Fulani man. All different groups are very well-represented. Amongst them you will find Christians and you will find Muslims.
“All of the defenses that people put forward, that, oh! it is the Igbo man, oh! it is the Hausa man, it is Yorubas, and so on, none of that is demonstrated by the facts. “That is why it is important that as a Nigerian elite, we have the special privilege of education, we have a special privilege of position. It is the responsibility of that privilege that we must fight everything that normally hinder and distorts our economy and kill our people as well.”
“That is why we must as an elite in leadership fight corruption. Some people suggest it is a matter of religion, It is not a matter of religion, I pastor a church. I pastor churches, so I know. What is important is that we must recognize corruption for what it is. Make no excuses for it and fight it with determination.
“I want to assure you that the government of President Buhari is determined to fight corruption, and that despite whatever those naysayers may say, we would fight it with everything that we have and we will leave a legacy in this nation of at least a government that chose to stand by principle and chose to stand by doing things right.”
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Laolu Akande
Senior Special Assistant-Media & Publicity
In the Office of the Vice President

Statement from the office of the Vice President on fuel pricing debate


Read the statement below…
Fellow Citizens:
I have read the various observations about the fuel pricing regime and the attendant issues generated. All certainly have strong points.
The most important issue of course is how to shield the poor from the worst effects of the policy. I will hopefully address that in another note.
Permit me an explanation of the policy. First, the real issue  is not a removal of subsidy. At $40 a barrel there isn’t much of a subsidy to remove.
In any event, the President is probably one of the most convinced pro-subsidy advocates.
What happened is as follows: our local consumption of fuel is almost entirely imported. The NNPC exchanges crude from its joint venture share to provide about 50% of local fuel consumption. The remaining 50% is imported by major and independent marketers.
These marketers up until three months ago sourced their foreign exchange from the Central Bank of Nigeria at the official rate. However, since late last year, independent marketers have brought in little or no fuel because they have been unable to get foreign exchange from the CBN. The CBN simply did not have enough. (In April, oil earnings dipped to $550 million. The amount required for fuel importation alone is about $225million!) .
Meanwhile, NNPC tried to cover the 50% shortfall by dedicating more export crude for domestic consumption. Besides the short term depletion of the Federation Account, which is where the FG and States are paid from, and further cash-call debts pilling up, NNPC also lacked the capacity to distribute 100% of local consumption around the country. Previously, they were responsible for only about 50%. (Partly the reason for the lingering scarcity).
We realised that we were left with only one option. This was to allow independent marketers and any Nigerian entity to source their own foreign exchange and import fuel. We expect that foreign exchange will be sourced at an average of about N285 to the dollar, (current interbank rate). They would then be restricted to selling at a price between N135 and N145 per litre.
We expect that with competition, more private refineries, and NNPC refineries working at full capacity, prices will drop considerably. Our target is that by Q4 2018 we should be producing 70% of our fuel needs locally. At the moment even if all the refineries are working optimally they will produce just about 40% of our domestic fuel needs.
You will notice that I have not mentioned other details of the PPRA cost template. I wanted to focus on the cost component largely responsible for the substantial rise, namely foreign exchange. This is therefore not a subsidy removal issue but a foreign exchange problem, in the face of dwindling earnings.
Thank you all.
May 13, 2016
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Femi Falana ‘Increase in fuel price is illegal, insensitive’ – Lawyer says


Falana said the Buhari administration acted against its promises not to remove subsidy in order to inflict undue pains on Nigerians.

Human rights lawyer and activist, Femi Falana (SAN) has condemned the new fuel price increase by the Federal Government, describing it as illegal, immoral and insensitive.
He said the government lacks statutory power to increase fuel pump price as the body empowered to take such decision is yet to be constituted.
Falana, who stated this in a statement issued in Lagos on Thursday, May 12, asked the government to revert to the old pump price.
He said the Muhammadu Buhari administration acted against its promises not to remove subsidy in order to inflict undue pains on Nigerians.
The lawyer stressed that since the Petroleum Products Pricing Regulatory Agency (PPPRA) empowered to recommend the price of petroleum products has not been reconstituted, such decision was wrong.
“In view of the illegality, insensitivity and immorality of the price increase the federal government should cancel it, revert to the status quo and consult widely with all relevant stakeholders in the society,” F alana said.
He also faulted the move based on the recent invitation of fresh bids for the setting up of modular refineries by the Directorate of Petroleum Resources (DPR), which resulted to licensing of 22 modular refineries “with combined capacities to refine 1.429 million barrels of crude oil per day. If the policy is genuinely pursued the construction of the refineries ought to be completed within the 9-12 months.
“If such refineries are established in the country the importation of fuel and the fraud associated with it will stop.
“In the interim, instead of importing oil from Europe and the United States the NNPC should refine crude oil for domestic consumption in neighbouring countries which have functional refineries.
“After all, Nigeria refines 60,000 barrels of crude oil per day in Cote d’ivoire which is not an oil producing nation.” He said.
He further stated that “If subsidy had been removed over a month ago and the country has been saving $2 billion (from fuel importation and subsidy removal) while the refineries are now working at full capacity Dr. Kachukwu should tell Nigerians the justification for the new removal of fuel subsidy announced by him yesterday.
“The cost elements that make up the N145 are provocative. If the total landing cost of a litre and other charges are fixed at N138 what is the basis of fixing the price at N145? For goodness sake, why should motorists be made to pay NPA/NIMASA charges, within and without storage/ bridging charges etc?”
READ: Falana petitions EFCC over Abacha loot »
Falana also said that the decision will have virile effect on the people and the economy, adding that the government took Nigerians by surprise with the drastic decision, without any public debate or consultation with relevant stakeholders whatsoever.

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Kachikwu ‘Petrol price will drop in 6 months’ – Minister says


He said if government did not make the decision, fuel queues across the nation would continue as there was no foreign exchange for importation.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has assured Nigerians that the removal of fuel subsidy would crash the price of petrol from the new price of N145 per litre to an unimaginable price over the next six months.
Speaking on Thursday, May 12, on Channels TV’s programme, Sunrise Daily, Kachikwu said that the subsidy removal became necessary in roder to end the fuel scarcity in the country.
According to him, the market dynamics would drive down the price of petrol in the long run “because there are a lot of Nigerians who are very active, very bullish, very talented in doing this; they just have been prevented by government intrusions.
“As it gets better and it gets to a point where we find that the market has stabilised in terms of supply, we will begin to pull back a bit in terms of determinants for pricing.
“You will be amazed at what will happen to your N145 price because it will go downwards,” he said.
On part of why the drastic decision had to be made, the minister said that the government could not provide foreign exchange for the importation of fuel as a result of decline in government earnings from oil.
“You don’t give what you don’t have. We want Nigerians to understand that we feel the pain, and we have tried to avoid it since I came in October. We have done everything we can.
“We first went on to the issue of the subsidies that we inherited which, by the way, were based on 50 to 55 million litres consumption, and we said the number looked bloated. So, we did an experiment and came to a conclusion that this country doesn’t consume more than 45 million litres a day.
“Then we came to a second point and said, ‘We are not even going to have subsidy again. We are going to exit it because there was just too much fraud involved in it,” he said.
He said if government did not make the decision, fuel queues across the nation would continue as there was no foreign exchange for importation.
He added: “So, left with that option, what were we supposed to do? We have struggled. Queues continue to go and they are back. And it will continue to happen unless we address the issues.
“If you free up Nigerians to find sources of funds, they will find those secondary funds. They will import the product; the burden on the NNPC will reduce and the country will have peace and subsidy will go away permanently.
“I am appealing to Nigerians to please for the first time realise that we are doing our very best. I have together with everybody who is in this government worked night and day looking for solutions.
“We mean well and Nigerians should please trust us. Give us a chance, you will be surprised what will become of your PMS price over the next six to eight months.”
READ: ‘How a militant threatened me on the phone,’ Kachikwu recounts »
The Federal Government had on Wednesday, May 11, announced the removal of fuel subsidy, with a new petrol price of N135 to N145 per litre, up from N86 and N86.50.
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