Fuel crisis over federal debt averted in top oil producer

THE most oil-rich nation in Africa nearly ran out of petrol this week.

Airlines grounded flights because they could not find jet fuel, and petrol stations nearly all closed down.

The companies licensed to restock Nigeria’s fuel depots refused to do so‚ saying the government – defeated in the March election – owed them more than $1-billion (R12-billion).

The result was Nigeria’s worst fuel shortage since the 1993 military coup. Television stations‚ banks and cellphone towers all went offline.

Doctors worried that their surger- ies would go dark‚ and in the north soldiers said they considered halting their pursuit of Boko Haram.

Late on Monday, the shortage ended when the government agreed to look into its debts. On Tuesday‚ petrol stations reopened in this country of 177 million people.

But the spectacle of such crippling scarcity in a country that exports billions of dollars of oil each month is a window into the dysfunction of the oil sector.

Nigeria earns 75% of its budget from oil. The country uses much of that revenue to subsidise fuel prices.

Nigerians buy petrol for just $1.65 a gallon (R5.26 a litre). To the companies that sell fuel to Nigeria‚ the government pledges to pay the difference between that price and the market rate within 45 days.

Over recent months‚ the government has fallen behind. The crashing price of oil has left Nigeria struggling to pay its bills.

Federal revenue fell 23% in the first three months of this year, compared with the year-earlier quarter.

During President Goodluck Jonathan’s six years in office its debt jumped 52% to $64-billion (R774-billion). Servicing that burden now consumes more than a fifth of gov- ernment revenue. Most state governments are in arrears‚ and some public servants say they have gone eight months without pay.

Against that grim backdrop‚ Muhammadu Buhari defeated Jonathan in March on a promise to clean up the way oil wealth is managed in a country with the world’s 10thlargest crude reserves. Now Buhari has his chance. Fuel sellers have said they are owed $1-billion for the first three months of this year‚ and at least a further $1-billion for April and May.

They were worried that Jonathan would not pay those bills before leaving office and that Buhari might do away with the subsidy. So they left ships full of fuel anchored off the port of Lagos.

Jonathan’s government said the amount importers demanded appeared inflated.

The consequences piled up for average Nigerians as the incoming and departing governments lobbied the same club of companies licensed to import fuel.

Internet and cellphone reception disappeared. Funmilayo Onajide‚ a spokeswoman for MTN Group‚ Nigeria’s largest telecom, said: “Services are degrading and our customers are beginning to feel the impact.”

Some television and radio stations went quiet on Monday. Passengers were stranded in sweltering airports at the weekend after two airlines cancelled most flights.

San Francisco’s Uber Technologies‚ which launched its taxi-hailing mobile app in Lagos in July‚ has struggled to keep drivers on the road. “Demand is very high and supply limited‚” the app now warns prospective riders.

Vigilantes driving bakkies across Nigeria’s northeast ceased patrolling the areas where they had been hunting Boko Haram fighters.

Late on Monday‚ Nigeria’s government persuaded fuel importers to open their depots and unload their ships, and agreed to create a committee that would investigate which debts are valid.

Senate finance committee chairman Ahmed Makarfi said the government had threatened to revoke the import licences of companies that did not assent to those terms.

“Arm twisting‚” the senator said, “is one of the tools of negotiation.”

Within hours‚ some petrol stations had reopened. Cars that had lined up for blocks began to refuel. – BDLive