Fuel Scarcity In Nigeria; The University Of Ibadan in the Big Picture

The past week in Unibadan has raised discussions on the increased transport prices, and the reluctance of transport workers to go to specific areas, among other things. Let’s take a look at some hypothetical scenarios. 

A.

“A 2nd-year Mathematics student staying at Ojoo has an 8 am test at the faculty of Technology lecture theatre. Having studied all night, he struggles to get ready and sets out at 6:50 am. Because they are fewer vehicles in the vehicle queue, he struggles to get transport. He arrives at UI at 7:25 am. He now begins phase 2 of the journey getting down to the faculty of Tech. Jide joins the long queue, it eventually reaches his turn but the transport worker on cue claims he can’t go that distance because of one student as a result of the scarcity. Jide begins to walk down in a bid not to miss his test. Gets to the TLT at exactly 8:03 am and is consequently not allowed to take the test he’s prepared so hard for”.

B.

“A final year Architecture student residing at Agbowo leaves her last class of the day at 7:10 pm and heads towards the gate. Shalom is unable to get transport owing to the reduced motorists in that axis aggravated by the scarcity as well. You can paint a picture for the safety of her person when you calculate the time it’ll take her to get to her room at the notorious Agbowo with her iPhone Xsmax and her hp ProBook 430s”.

Over time, Nigerians have built up a certain resilience, to adapt no matter what comes their way. From hikes in food prices to ever-erratic power supply, to the lack of power supply, terrible governance, and corrupt leaders, still, the default is an innate ability to – in spite of these continuous lows –  work through and live the best life possible.

Of these numerous challenges, a big talk point is the availability of fuel and its derivatives. The life of an average Nigerian revolves to an extent around fuel supply. The current fuel scarcity has been attributed to the unavailability of petroleum products, the difficulty in accessing foreign exchange, and the prevalence of adulterated fuel in the market. Technically, scarcity refers to the gap between resource supply and limitless wants in humans. Fuel scarcity, therefore, implies that the demand and use of fuel are higher than the actual supply or potential quantity of resources.

Background – How Far Back Does Fuel Scarcity go?

Nigeria used to pride herself as the largest oil producer in Africa for decades before being recently overtaken by Angola. It’s ironic that as one of the largest producers, fuel scarcity has consistently been a major issue. In the past 2 weeks, Nigerians have been victims of the horrific and distressing troubles of searching for fuel. Moving out in numbers to join long queues in the scorching sun either behind steering wheels, on motorbikes, or with jerry cans in hand. It is not an ordeal that anyone would voluntarily embark on. In most cases, a prospective change in pricing caused by the removal of fuel subsidies is usually the culprit.

Fuel scarcity in Nigeria dates back to the Civil war when Gen. Yakubu Gowon’s government increased pump price. General Sani Abacha also briefly increased the pump price before reducing it. Also, In early 2012, Goodluck Ebele Jonathan announced the removal of fuel subsidies with a consequent increase in pump prices. Considering that Democracy had already been consolidated, the removal set a series of retaliatory protests in motion as fuel prices rose from #67 naira to #145 naira. Labour unions embarked on indefinite strikes to protect the interest of the people; disgruntled protesters shut down fuel stations and mounted roadblocks in a bid to upset the government. These coordinated events paved way for the emergence of a functional black market that sold fuel between 300-500 naira per liter. From then onwards, fuel scarcities have popped up here and there in mid-2014, late 2017, 2019, and now thrice in 2022.

How Does UI share in the Fuel Struggle? 

Majorly, petrol is required to fuel vehicles for transport in the University. In the past week, things have taken a different turn. The rise in the cost of petrol has necessitated an increase in the price of transportation across campus, alongside other factors. On the part of students, it seems unfair that despite the continual sums of money they fork out daily, they’ve to pay extra just to get to classes around the school.

However, It’s another thing to be willing to pay and still not be able to get a cab or tricycle around campus right now. Transport workers occasionally decline trips to places like the Awo hall and stadium, Veterinary Medicine, Anatomy, Biochemistry, Physiology, and the faculty of Technology.  It now takes longer, costs extra, and induces way more stress.

On the part of transport workers, it only seems logical that a hike in price follows this fuel scarcity. There is the consideration of the cost in price and time dedicated to getting the average quantity of fuel. Often times the fuel on sale could run out before it indeed gets to one’s turn. Quantitively speaking, petrol pump prices have increased to a range between 230 –270 naira. It is only consistent numerically – for profit’s sake – that transport workers charge more than when it was 180 naira or thereabout, and this was prior to the strike. A lot of productive man-hours are lost to queuing for petrol at the fueling stations. In the course of this scarcity, many vehicle engines have been damaged by adulterated fuel imported as well as those purchased from unwholesome black marketers whose sole aim is super-profit.

The struggle extends to business owners. Some of these workers on campus require an almost uninterrupted power supply. Drycleaners need it to carry out their jobs, cafeterias need it to preserve meat, fish, coleslaw, and other perishables. When the usual UI blackout happens, they resort to powering generators. The implication of this scarcity is the rise in the budget that services their activities, and hence a hike in the standard of living for students. Furthermore, there is a corresponding increase in transportation costs, from where food items and produced and bought to the market, then to the cafeterias – who, in context, are retail consumers or middlemen. Therefore, logically speaking, the recent increase in fuel prices is partly responsible for the change in food prices across campus.  

Fuel Refining, the possible Culprit for Fuel Price Increase

Nigeria’s fuel crisis is heavily influenced by the lack of refining capacity of the country’s existing oil refineries, and this has negatively stalled the social and economic progress of the country. Nigeria is heavily dependent on the export of crude oil and the importation of petroleum products. The cost of this plays out in the very heavy subsidy burden placed on the country’s finances. In January 2022, it was revealed that Nigeria is the only member of the Organization of the Petroleum Exporting Countries (OPEC) that imports 90-95% of refined petroleum products to meet its domestic consumption. For other OPEC members, the reverse is the case – virtually every other OPEC country meets its domestic needs for the refined petroleum products by domestic refining crude oil. The lack of functional refineries has meant continuous importation of refined petroleum for Nigeria. For instance, Nigeria spent 37.9 billion dollars to import refined petrol between 2015 and 2019. Between 2015 and 2019, Nigeria’s total import value stood at $220.2 billion. In the same period, refined petroleum imports contributed $37.85 billion. That is, approximately 17 percent (16.91%) of the total import value goes to fuel import alone.

By implication, makeshift and illegal artisanal refineries spring up everywhere in the Niger Delta, and this contributes significantly to health and safety issues in the region and beyond. Already, refined petroleum takes the largest chunk of Nigeria’s import bill. 

What Are Some Potential Action Points?

It sounds ominous and pitiable that a country once ranked the 6th largest oil producer in the world continues to exist as a stronghold of organic poverty, despite plenty of petroleum resources. Ten years after the solutions proposed by the Goodluck Ebele Jonathan administration, it seems things are exactly where they left off at the beginning of this decade. 

For one, corruption and the continual need for investigations and solid oversight mechanism will remain strong talking points in this sector. For one, there is a sustained existence and pipeline for adulterated fuel in the market. The Premium Motor Spirit (PMS) for example, is composed of methanol, which is supposed to raise the octane level and reduce the knocking of engines. If – as claimed by the Nigerian Mainstream and Downstream petroleum Regulation Authority (NMDRA) – it has passed all the regulatory tests put in place, why are there consistent hints at and reports of its substandardness after it has gone commercial? 

On a bigger scale, if corruption could be reduced to a bare minimum, it is not hard to imagine the economic implication in terms of profit remuneration from the crude oil business. These funds would at least be directed to things that actually matter – consolidating production, sustainability projects, human capital, and resource protection and development among other things. Innovations like the Petroleum Industry Act (PIA) are also very important. For context, this act was introduced in 2021 to encourage investment in Nigeria’s crude oil refining capacity. The act made a provision for a less cumbrous process in obtaining licenses for investors seeking to delve into downstream oil operations. The debureaucratization of some core aspects in crude oil exploration, production, and (especially) distribution may be beneficial to collective economic reality if executed properly. Expanded provisions may be made for a deregulated downstream, to encourage private participation, competition, and the economic benefits that arise from a well-managed and healthy capitalism, such as increased investments. The government may have to step back a little and concentrate more on quality control and business balance regulation. 

And In Conclusion

The events of the past fortnight across the campus of the University of Ibadan, in and at the outskirts of Ibadan, featuring long-winding and tortuous queues, aggravated fuel searches, and frustrated fuel attendants is a consequence of a National problem. Tackling such situations is largely systemic, and it requires the nation of Nigeria to profess a country-wide solution. Small crowds incite bigger ones, one angered person instigates others. These situations need to be checked before they lead to a series of violent protests and a breakdown of law and order.

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