By Benedict Chidobi
Akwa, June 11, 2024 – Nigeria, a major crude oil producer in Africa is currently facing a repetitive fuel crisis that has left Nigerian frustrated and it is affecting small businesses and other phases of the nation’s economy.
It is imperative therefore to define fuel. It is a material such as coal, crude oil and other elements to produce heat energy.
When we talk about fuel in Nigeria, we are mainly referring to petrol, gas and kerosine, used in moving vehicles as well as certain engine types and airplanes.
The crisis is characterised by scarcity, of the products leading to long queues at petrol stations, and precipitating a thriving black market for the commodity.
Nigeria experienced a notable decline in crude oil production in April 2023, as reported by OPEC. Its output fell to 999,000 barrels per day, but by May 2023, it rose to 1.4 million barrels per day, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
A recent data from the Commission on Crude Oil Production reveals that Nigeria produced 1,427,616 barrels per day. This fluctuation was significant as it followed a previous decline.
However, despite being one of Africa’s top crude oil producers, Nigeria frequently experiences petrol and gas shortages that have a substantial negative economic impact on the society and generally on the economy.
These problems, which result from inadequate capacity for refining, ineffective distribution, and poor policy choices, have wide-ranging effects that ripple through multiple industries and exacerbate economic instability and suffering for millions of Nigerians.
However, we will explore the causes and consequences of Nigeria’s products crisis and examine the potential solutions.
One of the causes of fuels crisis in the country is insufficient refining capacity. Nigeria’s refining capacity is limited and insufficient to meet the country’s fuel demands. The country relies heavily on imported fuel to meet its energy demands and bridge the gap of insufficency.
The imported fuels being bought into the the country are more expensive than refining it domestically leading to higher costs for consumers and the government.
A shortage of refining capacity can lead to supply chain disruptions, resulting in fuel scarcity and long queues at petrol stations but by increasing refining capacity Nigeria can reduce its dependence on imported fuel to stabilise prices and improve fuel availability ultimately mitigating the fuel crisis.
Public transportation heavily dependent on fuels like petrol and gas that becomes more expensive and less reliable. This particularly affects low-income individuals who rely on these services to commute daily.
As transportation costs rise, so does the cost of food and other essential commodities, placing additional financial strain on already struggling households and the nation at large. Businesses, particularly small and medium enterprises (SMEs), are hit hard by these fuel scarcity. Many SMEs rely on fuel for generators due to the unreliable electricity power supply.
When fuel prices skyrocket or when fuel is unavailable, these businesses often reduce their operations or shut down temporarily, leading to lost of income and, in some cases, layoffs workers. This cycle of reduced business activity and job losses contributes to higher unemployment rates and economic instability.
The fuel crisis also affects healthcare delivery. Ambulances and other emergency services require fuel to operate efficiently. Shortages can delay critical medical responses, endangering lives. Furthermore, hospitals and clinics, particularly in rural areas, depend on generators to power their facilities. Fuel shortages can thus compromise their ability to provide essential medical services.
Inclusion, corruption is another significant issue affecting Nigeria’s oil sector, this evil call corruption do not affect the oil sector alone but in other sectors of the country, with billions of naira being lost to fraudulent activities. It has leads to the embezzlement of funds allocated for the maintenance and upgrade of refineries, pipelines, and other infrastructure, exacerbating the fuel.
