Why fuel scarcity has not gone away – Mele Kyari

Mele Kyari, the Group Chief Executive Officer, Nigerian National Petroleum Corporation Limited, has claimed the logistics challenge has been responsible for the protracted fuel scarcity across the country.

Kyari gave the explanation during an interview with Channels Television on Tuesday evening.

The NNPCL boss said the scarcity began with a glitch in road failure resulting from the floods that swept 31 states of the country last year.

He added that a three-day glitch in the transport of fuel would usually take three weeks to resolve.

He further explained that there were other challenges such as arbitrage, and the unplanned changes of having to transport premium motor spirit, by small vessels to the depots, noting that the cost of hiring the vessels had gone up from $21 dollars in January 2022, to $80 on Tuesday.

“Maybe shortage may not be the right word to describe the situation, we have a huge logistics challenge and this has been persistent in the last four to five months. But how did it start? It is important to know what happened.

First, there was a glitch in terms of road failure around certain axis because of the flood which nobody has control over. We were unable to move product to another efficiently.

Glitches and challenges

“Once we have a glitch of three days, it would require at least three weeks to resolve the challenge.

Once, we have this situation, a number of things come into play. One is that arbitrage will come, people would like to take advantage of the situation, and they will move product from where it is sold cheaply to where it is expensive.

Greed will push people to hoard the products in their tanks until they are able to sell them at the maximum price. There were also unplanned changes. For instance, once products land in this country, we have to take them by small vessels to the depots.

“The cost of hiring those vessels shifted from $21 January last year to $80 today and our compensation template under the current pricing regime didn’t see that coming.”

Kyari also stated that managing trucks and depots across the country posed a secondary challenge to the distribution of fuel across the country.