Nigeria’s growing population keeps facing fuel shortages despite it being Africa’s largest oil producer. Why?
“What started as a mistake about a month ago has become a monster, visiting untold hardship to almost every citizen, the fuel scarcity caused by the importation of bad petrol into the country in early February has degenerated into a crisis.”
TVC News Nigeria
It’s been 66 years since crude oil was first discovered in Nigeria and it has since become Africa’s largest exporter.
But a few weeks ago, Nigeria experienced a major fuel shortage.
Drivers queued for hours and hours, prices went up and fights broke out at petrol pumps. At one point, aviation operators said they only had 3 days’ worth of fuel left.
How does a country that, as of 2019, produced 1.6 million barrels of crude oil a day, find itself facing a fuel shortage?
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“President Muhammadu Buhari has apologised to Nigerians over one of the pressing problems in the country and that’s petrol scarcity and power outage currently being experienced across all zones in the country…”
TVC News Nigeria
Nigeria’s current president, Muhammadu Buhari, doubles as the country’s petroleum minister.
But in the seven years since he became president, despite making several promises to do so, little has been done to improve the country’s refining infrastructure, which means it relies almost entirely on refined oil imports to meet demand.
In February of this year, the Nigerian National Petroleum Company, or NNPC, found that one of those batches of oil was “substandard” – containing high levels of Methanol.
The NNPC manages the Nigerian government’s imports but said it doesn’t usually check for Methanol levels. Meaning at the point of arrival, it went undetected.
Once the problem was identified the oil was withdrawn, causing a 10-day shortage, and leading to fuel scarcity across the country.
“Despite massive investments and privatisation of the power sector, constant and adequate electricity supply has remained a serious challenge for Nigeria just as the country’s power sector witnessed another electricity system collapse forcing households manufacturers and others into total darkness.”
P&O Boss speaking over Zoom, Sky News
Nigerians depend on this fuel for much more than powering their cars.
Electricity supply in Nigeria is patchy at best due to the very unreliable power grid, so many turn to the use of fuel-powered generators to power their homes and businesses, or at least to provide a backup.
This year, on the 14th of March, the power grid shut down completely… and again the next day. Without power and with nowhere to get fuel, large parts of the country were plunged into darkness.
[Clip of Dangote by Burna Boy]
But, Nigeria’s oil refining capabilities may yet be saved, thanks to the richest man in Africa, Aliko Dangote.
With an estimated net worth of around $14 billion, Aliko Dangote is the founder of The Dangote Group, a multinational conglomerate that deals primarily in construction materials. Steel, cement and oil & gas.
His company could be the key to solving Nigeria’s oil crisis, or at least significantly improving it.
First announced in 2013, construction has begun on a new Dangote oil refinery, close to Nigeria’s largest city, Lagos. Once complete it could see Nigeria produce up to 650,000 barrels of refined crude oil – enough to reduce the country’s dependence on imports.
However, the plant is not due to start operating until later this year or even early next year. So whilst it may be a game-changer in the future, it does little to help the people of Nigeria who are still struggling now.
A solution that could come sooner would be for the government to legalise and subsidise makeshift ‘artisanal’ refineries, and integrate them into the national system.
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Last year, President Buhari signed into law the Petroleum Industry Act 2021, which aims to make it easier for investors to be given operational licenses in Nigeria.
“The petroleum industry act provides legal governance, regulatory, and fiscal frameworks for the Nigerian petroleum industry… the development of host communities and related matters.”
Arise News
But that hasn’t shielded him from criticism because during the latest crisis he travelled to London for what was described as a “medical trip”, whilst his wife celebrated her birthday in Dubai.
And this issue is also not untouched by the problem of rampant corruption in Nigeria.
Questions have been raised about the management of public money allocated in 1999 to maintain and manage Nigeria’s four broken refineries.
In September 2020 they were shut down due to damaged pipelines.
In the same year, the country refined no crude oil but the refineries still cost the government ₦10 billion – which is around £20 million in today’s money.
This month, the Socio-Economic Rights and Accountability Project wrote a letter to President Buhari to probe the spending on the country’s four refineries – suspecting corrupt mismanagement of the funds.
Restoring Nigeria’s fuel security is one thing. Tackling corruption will be another task entirely.
Today’s story was written by Tomini Babs and produced by Ella Hill.
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