What is causing Nigeria's petrol scarcity?

Nov 01, 2022|Noelle Okwedy

Petrol scarcity isn't a new experience for Nigerians.

At least once a year, usually in December, Nigerians suffer through long queues at petrol stations or buy petrol at higher rates from black-market sellers in certain parts of the country. It's a given that most Nigerians will spend more time or money buying petrol in December.

Key takeaways:

  1. Nigeria has had three major petrol scarcity events this year; the latest was in October.

  2. Although these events might seem unrelated, they are all caused by Nigeria's petrol subsidy because, with prices fixed by the government, changes in supply affect quantity.

  3. The petrol subsidy is beginning to unravel and is impacting the entire downstream petrol value chain.

However, with three major petrol scarcity events, 2022 has been worse than usual.  The key word here is "major" because there have always been isolated petrol scarcity events in parts of the country. For instance, in September, petrol scarcity was only in Port-Harcourt when petrol tankers protested illegal extortion from multiple security teams in the city. Also, there's been petrol scarcity in Abuja since early October due to the flooding along the supply-chain route, making it difficult for tankers to get through.

But here's a timeline of Nigeria's significant petrol scarcity events this year.

First, in February, the NNPC, the sole importer of Nigeria's petrol, imported petrol with methanol which is against the country's specifications. Next, in June, petrol transporters stopped transporting petrol to parts of the country due to diesel prices. As a result of this scarcity, marketers preferred to sell to specific locations with higher prices to recover their costs, causing petrol scarcity. And the latest incident, which we're still recovering from in October, was due to logistics challenges caused by the cost and availability of vessels to transport petrol.

However, all three incidents are consequences of Nigeria's petrol subsidy, and that's what we'll be exploring today. First, an explainer of how petrol moves in Nigeria.

From the high seas to your petrol tank

Most of Nigeria's petrol is refined or blended in North-Western European countries, and the NNPC has been the sole importer of petrol to Nigeria since about 2017. With Nigeria's petrol subsidy, it's not profitable for private

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