Nigeria may have moved one step closer to solving a recurring fuel scarcity, as the Federal Government has concluded arrangements to offset the ₦650 billion it owes members of the Depot and Petroleum Products Marketers Association (DAPPMA). DAPPMA disclosed this in a statement signed by its by its chairman, Prince Dapo Abiodun, and executive secretary, Olufemi Adewole.
The association’s members had in February threatened to lay off its workers over the debt. The payments are however subject to the approval of the National Assembly.
What led to the debt?
Previous administrations, in a bid to keep fuel prices stable, embarked on a subsidy payment scheme. The government paid the differential between global petrol prices and its fixed pump price. The scheme was however riddled with fraud, and marketers collecting payments for petrol not supplied. The Buhari administration replaced the scheme with the Direct Sale Direct Purchase (DSDP) scheme.
Under the agreement, the NNPC provides monthly crude oil lifting in return for the delivery and supply of Nigerian standard specification of petroleum products equivalent in value to the Crude Oil received from NNPC subject to general terms and conditions. This too has had limited success.
Perpetual fuel scarcity
The nation has been in the throes of a recent fuel scarcity, which seems to have defied all solutions. Marketers have refused to bring in products because landing cost of petrol is above the government’s fixed price of N145. The Nigerian National Petroleum Corporation (NNPC) has ramped up its importation of products, but this seems to have come to naught because of increased smuggling.
Porous borders and the price disparity between pump prices in the country and her neighbours, make smuggling a lucrative affair. While Nigeria currently sells petrol officially at $0.48 per litre, Togo sells at $0.94 per litre. The Republic of Benin also sells at $0.96. Chad currently sells petrol at $1.07 per litre.