Why Fuel Scarcity Persists – NNPC Boss, Mele Kyari

The group chief executive officer of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, has given reasons for the prolonged fuel scarcity in the country.

Kyari noted that greed across the chains of distribution is responsible for the scarcity that continued to be a witness in many parts of the country.

He disclosed this while speaking on NTA’s “Good morning Nigeria” on Monday.

“It is a chain of relationships. It is a chain of engagement and we take responsibility. We are the single point of communication for this. We understand this very perfectly but the reality today is that there are a number of things happening,” he said.

“There is greed. Greed is not in the NNPC. Greed is across the value chain; it is all the way from the depots to the fuel stations to the trucks to those you meet on the road.”

Kyari said as oil marketers move products from location to location, so many kinds of fees are paid (at local government and state government levels) and all manners of collections are made, adding to the logistics challenge.

“And ultimately, our most recent engagements have addressed this so that those complications that are outside the control of the NNPC are now addressed. Because of the engagement, we had with our trade partners, the government security agencies, and regulatory agencies, we are very optimistic that it is a very good transition,” the GCEO said.

He added that as long as there is an arbitrage regime and marketers see price differentials, they will have difficulty transporting products to certain locations.

Further speaking, Kyari added that the country does not have supply issues but a distribution problem.

He said the distribution challenge arises as a result of a shift in the cost of logistics in the business of transporting fuel from mother vessels to terminals into trucks to fuel stations.

“So, it is really not a matter of scarcity. When you say scarcity, the product is not available. Once a product is not available, you can say that there is scarcity but when there is a distribution challenge, there is consumer behaviour,” he said.

“Our typical response to a situation like this is for people to panic and everybody goes to the fuel station. Whether they need it or not, they wake up in the morning and decide to go and queue up. And by the way, people have actually made a trend out of this.”

He noted that once prices are crashed at the depot, the prices at filling stations will also decrease and “that arbitrage will disappear”.

“Then people will see that the prices across the stations, whether they are owned by NNPC or independent marketers, will have some normalcy, and fuel queues will vanish,” Kyari said.