The Minister for State for Petroleum, Dr Ibe Kachikwu has been under fire for comments he made last week regarding the lingering fuel scarcity.
Comments about him not being a magician had upset a lot of Nigerians who had wasted hours queuing for fuel for almost a month now. This is perhaps the longest fuel scarcity in recent memory. The Minister was summoned by the Senate Committee on Petroleum Resources (Downstream) and apologized for his comments. He explained two of the major reasons why Nigeria was experiencing fuel scarcity.
Inability of marketers to import
“Let me put the reasons for the scarcity in three categories. First, when we came in August, this country had arrears of unpaid subsidy claims that were in excess of N600bn, which were not paid for over a year.
“Progressively, over a period of eight months, prior to my coming on board, people had been staying away from importation not at a heavy level, but by about 10 to 15 per cent of allocations were not being met.
“There was hope that ultimately, if the subsidy regime continued, they would get paid; so, some people continued to import, but by the time we came in, people had reached a breaking point and most of the companies didn’t have the liquidity even to go to the banks and open letters of credit, and that became a major issue.”
No foreign exchange
“The second major issue was that once the N600bn subsidy money was paid, the ability of the marketers to import the product became a challenge, because they could not raise letters of credit, and up to this point, that still remains a major issue.
“So, even if they wanted to import, they needed letters of credit and adequate foreign exchange cover. Some of them were owing arrears of liabilities as a result of the commitment I had made on petroleum importation.”
The Minister went on to explain that the current fuel crisis is likely to end between 6th to the 7th of April. This is the third set of dates in one month the Minister has claimed fuel queues will disappear.